If a market becomes deregulated and is forced to change from monopoly to competition,the monopolist may be stuck with costly assets for which no returns are possible.These assets are known as:
A)monopoly assets.
B)market assets.
C)non-returnable assets.
D)stranded assets.
E)sunk assets.

Question

Quizplus · Accepted Answer

Stranded assets are assets that become obsolete and/or of little value due to changes in the market or regulatory environment. In the case of a deregulated market moving from monopoly to competition, the monopolist may have invested in assets that are no longer valuable because they were developed for a monopolistic market. These assets become stranded as they are unable to generate returns in the new competitive market.

If a Market Becomes Deregulated and Is Forced to Change