If profit regulation is used to control a natural monopolist,the monopolist is likely to

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Profit regulation in the context of a natural monopolist often leads to the monopolist inflating or padding the costs of production. This is because if profits are capped, one way for the monopolist to effectively increase its allowed revenue (under the guise of higher operational costs) is by inflating costs, which can then be passed on to consumers as higher prices within the regulatory limits.

If Profit Regulation Is Used to Control a Natural Monopolist,the