A major criticism of industrial regulation is that

Question

Quizplus · Accepted Answer

One major criticism of industrial regulation is that by allowing natural monopolists to receive a fair return price, there is little incentive for them to contain costs. This can lead to higher prices for consumers and an inefficient use of resources. Marginal cost pricing (choice B) is actually a method of regulation that encourages efficiency by setting prices based on the cost of production. Choice A is not a criticism, but rather a description of how industrial regulation has been applied. Choice D is also not a common criticism, as regulatory commissions are meant to prevent natural monopolies from going bankrupt by ensuring they receive a fair return on investment.

A Major Criticism of Industrial Regulation Is That