A reduced incentive to adopt cost-saving innovations is a concern
A) only for government-owned natural monopolies.
B) only for cost-plus regulated firms.
C) for all monopolies.
D) only for exclusive contracting.
E) for both government-owned and cost-plus regulated natural monopolies.

Question

Quizplus · Accepted Answer

Both government-owned and cost-plus regulated natural monopolies face reduced incentives to adopt cost-saving innovations because their profits are guaranteed by regulation or government ownership, providing less motivation to reduce costs.

A Reduced Incentive to Adopt Cost-Saving Innovations Is a Concern