In considering whether to regulate a monopoly, regulators should consider the tradeoff between
A)the benefits to other industries and the costs to taxpayers.
B)the cost of monitoring the firm and the increase in government tax revenues.
C)deadweight loss and government tax revenues.
D)profit margin and market prices.
E)market power and efficiency.

Question

Quizplus · Accepted Answer

When considering whether to regulate a monopoly, regulators should weigh the potential benefits of increased efficiency against the potential harm of market power. Monopolies can potentially engage in anti-competitive practices, such as charging higher prices or limiting supply, which can harm consumers and reduce overall efficiency. At the same time, regulating a monopoly may impose costs on the firm and potentially reduce its incentives to innovate and invest in new technology. Therefore, regulators must weigh market power against efficiency when considering whether to regulate a monopoly.

In Considering Whether to Regulate a Monopoly, Regulators Should Consider