Chap009.9 - Slide 51 Public Policy Toward Natural Monopoly...

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9 Chapter 9: Monopoly and Other Forms of Imperfect Competition Slide 49 Public Policy Toward Natural Monopoly ± Should we regulate natural monopolies? How? ± Methods of Controlling Natural Monopolies z State ownership and management ² Marginal cost pricing ² Less incentive for innovation Chapter 9: Monopoly and Other Forms of Imperfect Competition Slide 50 Public Policy Toward Natural Monopoly ± Methods of Controlling Natural Monopolies z State regulation of private monopolies ² Cost-plus regulation o High administrative cost o Less incentive for innovation o P does not equate to MC Chapter 9: Monopoly and Other Forms of Imperfect Competition
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Unformatted text preview: Slide 51 Public Policy Toward Natural Monopoly Methods of Controlling Natural Monopolies z Exclusive contracting for natural monopoly Competition for the contract sets P = MC Difficulty when fixed costs are high such as electric utilities Chapter 9: Monopoly and Other Forms of Imperfect Competition Slide 52 Public Policy Toward Natural Monopoly Methods of Controlling Natural Monopolies z Vigorous enforcement of anti-trust laws Helps prevent cartels May prevent economies of scale...
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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