Microeconomics › Section K · Monopoly and antitrust policy › Topic K.3
Regulating natural monopolies
For a water utility, breaking up the monopoly IS the harm: one pipe network is the whole point. So antitrust's usual medicine - split the firm, invite entry - is off the table, and the regulator's real question becomes subtler: how to control a monopoly that must be allowed to exist.
In this topic
- Why the usual medicine fails
- Four regulatory choices
- Worked example: the four points, in numbers
- The efficient-but-broke problem
- Cost-plus regulation
- Price-cap regulation
- Public ownership and competition for the market
- Worked example: choosing a regime
- Common mistakes to avoid
- Key takeaways
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