Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 19 - Antitrust Policy and Regulation - Review Questions: 5

Answer

a. Public ownership and public regulation.

Work Step by Step

Natural monopolies occur when a large firm is able to supply the products at a lower price than could a number of firms due to economies of scale. This will cause the smaller firms to exit the market as they are not any more competitive. Through public ownership and public regulation, the profit of the monopoly is shared among a large group of shareholders through which the profit is shared among a large pool of people and through public regulation, the prices are controlled by the government so that the natural monopolies don't occur.
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