Download the App!
Get 24/7 study help with the Numerade app for iOS and Android! Enter your email for an invite.
Get the answer to your homework problem.
Try Numerade free for 7 days
Like
Report
If public utilities are a natural monopoly, what would be the danger in splitting them into a number ofseparate competing firms?
Antitrust laws are the laws and regulations that are imposed by government or authorities toensure the increased competitiveness in the market. It also helps observe and control mergersand acquisition taking place between big or key firms.Natural monopolies are those industries where the intilal costis very high and economies ofscale is achieved by only one firm mosiding utilitity reguated, and if these are brekeninto small frons trinen the firm will lose the benefit of low average cost actifieved because ofeconomies of scale $\$ 0$ , now these froms will proide the same good with higher price because ofhigher cost.
No Related Courses
Chapter 11
Monopoly and Antitrust Policy
Markets and Welfare
The Economics of the Public Sector
Firm Behavior and the Organization of Industry
Topics for Further Study
02:23
If public utilities are a …
01:25
Suppose the local electric…
01:09
Will the firms in an oligo…
06:42
Why might one administrati…
01:39
Discuss the major barriers…
02:27
In what sense is a natural…
02:04
What is a natural monopoly…
01:46
Suppose that the governmen…
03:15
How is monopoly different …
07:19
How does monopolistic comp…
03:32
Imagine a monopolist could…
07:11
Both antitrust policy and …
05:05
How does the problem of li…
02:22
Classify each of the follo…
01:42
04:37
Suppose a proposed merger …
03:20
What stops oligopolists fr…
06:38
Why do oligopolies exist? …
0:00
A company faces two kinds …
00:29
What is the difference bet…
a lot of public utilities are natural monopolies, these air water companies, electric companies. But as we know, sometimes from the consumer standpoint, we may not want Monopoly's. So why are we not just letting up natural monopolies of thes public utilities? Well, the answer said, the cost of splitting them up is too high. The reason why we have not your monopolies and one water company may provide water for a big section. It's because they kind of owned the pipelines that are underneath. Ah, a particular city. I mean, for example, if we split that up into four different firms that each one of those firms has to have its own set of pipes for there to be competition. If that is the case, you can imagine how much it would cost to then increased the number of pipes for each one of these companies to spread the same range as a monopoly spread. For that reason, we may not want to split up a water company. The same was true for electric companies, electricity scattered through cables, and so if you were just put the mob, you need to now make sure that that's the smaller firms right from the split can provide electricity to the same households to raise competition. And again, this is just a very costly procedure. That's why natural Monopoly, sir, don't really get split up when, when it comes to public utilities.
View More Answers From This Book
Find Another Textbook
If public utilities are a natural monopoly, what would be the danger in dere…
Suppose the local electrical utility, a legal monopoly based on economies of…
Will the firms in an oligopoly act more like a monopoly or more like competi…
Why might one administration interpret and enforce the antitrust laws more s…
Discuss the major barriers to entry into an industry. Explain how each barri…
In what sense is a natural monopoly “natural”?
What is a natural monopoly?
Suppose that the government has decided to tax all the firms in a monopolist…
How is monopoly different from perfect competition?
How does monopolistic competition differ from pure competition in its basic …
Imagine a monopolist could charge a different price to every customer based …
Both antitrust policy and industrial regulation deal with monopoly. What dis…
How does the problem of limited and bundled choice in the public sector rela…
Classify each of the following items as a public good, a private good, a nat…
Classify each of the following goods as a private good, a public good, a nat…
Suppose a proposed merger of firms would simultaneously lessen competition a…
What stops oligopolists from acting together as a monopolist and earning the…
Why do oligopolies exist? List five or six oligopolists whose products you o…
A company faces two kinds of risk. A firm-specific risk is that a competitor…
What is the difference between a private company and a public company?
02:21
What is the poverty line?
05:41
The state of Colorado requires oil and gas companies who use fracking techni…
01:18
To ensure safety and efficacy, the Food and Drug Administration regulates th…
01:24
What is a pollution charge and what incentive does it provide for a firm to …
08:27
Return to Figure 9.2. Suppose P0 is $10 and P1 is $11. Suppose a new firm wi…
02:10
How do we measure a four-firm concentration ratio? What does a high measure …
08:08
Think about the business cycle: during a recession, unemployment increases; …
05:42
Which has a higher average return over time: stocks, bonds, or a savings acc…
01:40
What real world changes made the deregulation possible?
02:18
How would an improvement in technology, like the high-efficiency gas turbine…
