Question

In: Economics

  Public policy toward monopolies Suppose that a government that is skeptical of efforts to regulate...

 
Public policy toward monopolies Suppose that a government that is skeptical of efforts to regulate prices charged by private companies is nevertheless concerned that an electric utility company is taking advantage of consumers with unfair pricing policies .
 
Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?
  • Do nothing at all.
  • Turn the company into a public enterprise.
  • Regulate the firm's pricing behavior.
  • Use antitrust laws to increase competition.

Solutions

Expert Solution

Option B is correct.

When a company starts exploiting the consumer, the government must turn that company into a public enterprise as the organization wholly or partly owned by the state and controlled through a public authority. Through this conversion, the government will be able to achieve its objective and consumer is not to be exploited.


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