Suppose that there is only one provider of a service in a state. Because this provider experiences economies of scale, the government does not want to break it into smaller pieces, but it does want the provider to supply the efficient quantity. Which of the following policy options might most effectively enable the government to achieve its objectives in this situation? Use the law to increase competition. Turn the company into a public enterprise. Regulate the pricing behavior. Do nothing at all.

Suppose that there is only one provider of a service in a state. Because this provider experiences economies of scale, the government does not want to break it into smaller pieces, but it does want the provider to supply the efficient quantity. Which of the following policy options might most effectively enable the government to achieve its objectives in this situation? Use the law to increase competition. Turn the company into a public enterprise. Regulate the pricing behavior. Do nothing at all.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

10. Public policy toward monopolies
Suppose that there is only one provider of a service in a state. Because this provider experiences economies of scale, the government does not want
to break it into smaller pieces, but it does want the provider to supply the efficient quantity.
Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?
Use the law to increase competition.
Turn the company into a public enterprise.
O Regulate the pricing behavior.
Do nothing at all.

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