ECON-1203 : Exam3notes
Document Summary
But to one large geographic area, only one oil company and one rail line service customers. What would hold more value, an established nationwide network using rented space from a single satellite but having four times as much traffic. Regulation: recall that some monopolies form because the environment will be unprofitable for more than one firm, natural monopolies are said to be those which arise from very large economies of scale. Profit regulation: here government prefers monopoly earn zero economic profits. Regulators would then mandate a price which equals atc: this is known as average cost pricing with such regulation. Though the firm has no incentive to control costs. It will simply let costs use and petition regulators to allow a greater price: 3. That is the regulator has the incentive to look after the public, and will perform as intended: 3) public choice theory of regulation, the regulators are incentive to act according to their won interest.
