Political online game and economic simulation

Yes. You can only have one company filling those pipes with drinking water. To have more than one company providing water you would need more than one pipeline, which would create enormous inversion costs for only marginal gain (i.e.: Even if a company managed to build the whole pipe system needed to compete with the existing water company, it would still take years for the profits to pay back the infraestructure costs and turn profits).

Indeed. There's only one pipe system, one sewer system, one electric grid. The practical on these particular issues simply kills the competition theory. There's one universal distribution medium. Where people get the water and electricity, that's another story. All water and energy producers should have fair and equal access to the pipe and grid systems. Like always, one needs that 3rd party for the circuit to work - and that 3rd party is the public authority.