Question

Discuss the pros and cons of two monopoly regulation methods and evaluate their effectiveness:

• Which regulation method is the most effective? Why?
• Which regulation method fits and exemplifies the two regulation theories?
• If you were charged with regulating a monopoly, how would you do it?
• Take parts from each regulation method you discussed and explain why you think your method would be effective.

Answer 1

Methods to regulate monopoly law are as follows:

Price Discrimination Marginal value pricing
The advantage of Price discrimination is that companies could increase the revenues as in keeping with changes made within the rate by using their choice. The disadvantage of charge discrimination is that the patron does not discover any surplus due to boom in fee.

The benefit of Marginal Cost Pricing is that it creates sales to the business enterprise. The disadvantage of Marginal Cost Pricing is that the corporation is unable to promote merchandise at a better fees.

The handiest technique is Marginal Cost Pricing as it produces income to the company on a long time. If being charged with monopoly, the rate is sent as in step with the earnings of the company and convenience of the clients.

The 4 techniques to modify a monopoly are charge dscrimination, common cost pricing, marginal cost pricing and nationalization. The effective technique is Marginal Cost Pricing.