A method of regulation that is designed to encourage efficient production by allowing firms to share in any cost savings they achieve in producing their product is called contestable-rate regulation.

Question

Quizplus · Accepted Answer

Contestable-rate regulation is not the correct term for a method of regulation designed to encourage efficient production by allowing firms to share in cost savings. The correct term for this concept is "incentive regulation" or "performance-based regulation," where regulatory mechanisms are designed to align the firm's interests with those of the consumers or society by rewarding cost efficiency and penalizing inefficiency.

A Method of Regulation That Is Designed to Encourage Efficient