Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 12.2, Problem 2ST
To determine
Explain the essence of the capture theory of regulation.
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Compare and contrast the public-interest and special- interest theories of economic regulation. What is the capture theory of regulation?
Given what you know about regulatory capture, can you describe a possible scenario where accusations of restrictive practices ends up limiting competition, rather than extending it?
Compare two methods of monopoly regulation.
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- What are the objectives of regulators? Under what conditions is regulation most likely to raise welfare?arrow_forwardDiscuss the pros and cons of two monopoly regulation methods and evaluate their effectiveness:arrow_forwardWhich theory of regulation explains why the massive fraud of Bernie Madoff went undetected for years?arrow_forward
- To what extent would you consider the setting up of regulatory bodies an appropriate and effective solution to the principal-agent problem in markets where there is a natural monopoly?arrow_forwardDiscuss the dilemma of regulation faced by the government in the case of regulating monopoly?arrow_forwardQuestion #10: What is an economic regulation? (Read Chapter 4, 27 and 28), or MindTap Microeconomics 9e (Ch 4, ch. 13, and ch.14) -Boyes W. and Melvin M. (2014), Economics (Full), 10th Edition, South-Western, Cengage Learning. OR -MindTap for Boyes’ Microeconomics 9e. one-page explanation.arrow_forward
- Breifly explain regulation in case of a natural monopoly. Provide 3 common examples of regulation. Breify discuss the benefits of privilization set out in the text and explain what is required for privilation of a nationalized asset in order for privilization to work well.arrow_forwardDefinition of Economic Theory of Government Regulationarrow_forwardOur textbook discusses two methods of regulating natural monopolies. One of them is price cap regulation. One of the following answers is an example of price cap regulation. Which one? Group of answer choices A government setting the price that a cable company can charge over a period of time by looking at the cable company's accounting costs and then adding a normal rate of profit. A government setting a price level for a public utility several years in advance. When a regulated public utility plays a large role in setting up the regulations that they will follow. When a firm no longer is considered a natural monopoly because of decreased demand.arrow_forward
- Why might profit regulation lead to rising costs for the regulated firm?arrow_forwardEconomic theory leads to the conclusion that an unregulated market that is controlled by a monopoly will lead to an inefficient outcome. Discuss how this conclusion has influenced U.S. policy with respect to regulation of business.arrow_forwardIn some regulated industries, regulatory agencies pre-vented prices from falling, and as a result many firms opened for business in those industries. Is this kind of regulation competitive or anticompetitive? Is it a good idea or a bad one?arrow_forward
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