Chapter 15 - Economic Regulation and Antitrust Policy

Public utilities

________ are monopolies that are owned or regulated by the government.

downward sloping

Any company that faces a(n) ________ demand curve has some pricing control and hence some market power.

Monopolies

________ have also been linked to other types of distortions.

natural monopoly

A(n) ________ has a long- run average cost curve that slopes downward throughout the spectrum of market demand due to economies of scale.

Market power

________ refers to a company's capacity to raise prices without losing all of its customers to competitors.

Social regulation

government regulations aimed at improving health and safety

Economic regulation

government regulation of natural monopoly, where, because of economies of scale, the average production cost is lowest when a single firm supplies the market

Antitrust policy

government regulation aimed at preventing monopoly and fostering competition in markets where competition is desirable

Capture theory of regulation

producers’ political power and strong stake in the regulatory outcome leading them, in effect, to “capture” the regulating agency and prevail on it to serve producer interests