Question

Public policy toward monopolies Suppose that a government that is skeptical of efforts to regulate prices charged by private companies is nevertheless concerned that an electric utility company is taking advantage of consumers with unfair pricing policies. Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?

A. Do nothing at all.
B. Use antitrust laws to increase competition.
C. Turn the company into a public enterprise.
D. Regulate the firm's pricing behavior.

Answer 1

C.

Step-by-step explanation:

State Owned Enterprises are those enterprises that is legally taken by the government. This entity is formed by the government to take authority over the commercial activities. It is also known as SOE and Government Owned Corporations (GOC). These enterprises are formed to function on account of government. It helps in avoiding the unfair pricing policies by private companies in some markets.

In the given situation, the government should use the policy of turning the company into a public enterprise through SOE policy. With this, the government will be able to regulate the prices and avoid unfair pricing by the private companies.

So, the correct answer is option C.