21. If public utilities are a natural monopoly, what would be the danger in splitting them into a number of

11 • Critical Thinking Questions 277

separate competing firms?

22. What is cost-plus regulation?

23. What is price cap regulation?

24. What is deregulation? Name some industries that have been deregulated in the United States.

25. What is regulatory capture?

26. Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the

benefit of consumers?

Critical Thinking Questions

27. Does either the four-firm concentration ratio or the HHI directly measure the amount of competition in an

industry? Why or why not?

28. What would be evidence of serious competition between firms in an industry? Can you identify two highly

competitive industries?

29. Can you think of any examples of successful predatory pricing in the real world?

30. If you were developing a product (like a web browser) for a market with significant barriers to entry, how
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