Regulation that guarantees a normal rate of return on investment gives public utilities a strong incentive to keep costs down.

Name: Regulation that guarantees a normal rate of return on investment gives public utilities a strong incentive to keep costs down.
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Such regulation often leads to a lack of incentive for cost reduction because utilities are guaranteed a certain rate of return on their investments, making them less motivated to lower costs.

Regulation That Guarantees a Normal Rate of Return on Investment