In a natural monopoly case, the socially optimal pricing policy rule will often yield a higher price than the fair-return pricing rule.

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In a natural monopoly, the socially optimal pricing policy, which sets price equal to marginal cost, often results in a lower price than the fair-return pricing rule, which sets price equal to average total cost to allow the firm to break even.

In a Natural Monopoly Case, the Socially Optimal Pricing Policy