The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a
A)profit-maximizing monopoly.
B)producer of externalities.
C)revenue-maximizing monopoly.
D)natural monopoly.

Question

Quizplus · Accepted Answer

Regulating utilities is necessary because they often operate as natural monopolies, meaning that it is more efficient for one firm to provide the service rather than having multiple firms competing. This is because of high fixed costs and economies of scale in the production process. Antitrust laws are not effective in promoting competition in such markets, and regulation is needed to ensure that the natural monopoly does not abuse its market power by charging excessive prices or providing poor service.

The Reason to Regulate Utilities Instead of Using Antitrust Laws