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In microeconomics: is it necessary to regulate the naturally occurring monopolies that exist in the market today?

Marketing Dec 29, 2020

In microeconomics: is it necessary to regulate the naturally occurring monopolies that exist in the market today?

Expert Solution

Yes, that should be the case, because, without regulation, it could happen that those naturally created monopolies could have a negative impact on the consumer surplus, as consumers become dependent on that firm, and the country as a whole tends to lose, as production and consumption could be away from a level of balance that is not optimal for any economic growth. So, through regulation, some leakage of the economic growth surplus may be restricted by the government. Regulation should have a limit, however, otherwise, it could have more negative consequences.

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