Final answer:
Providers set charges on the basis of market competition in competition-driven charging.
Step-by-step explanation:
In competition-driven charging, providers set charges on the basis of market competition.
Regulators of public utilities traditionally followed two approaches to set prices: cost-plus regulation and price cap regulation. Cost-plus regulation involved setting prices based on average costs of production plus a normal rate of profit, while price cap regulation set a price that the firm can charge over a specified period of time, often with declining prices. Both approaches aimed to balance the interests of consumers and the broader social interest.
Ultimately, in competition-driven charging, providers determine charges based on market forces and the level of competition in the industry.