Meaning of dilemma of regulation
Dilemma of regulation
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Economics terminology
Glossary of economics terms and concepts
Meaning and definition of dilemma of regulation
The tradeoff faced by a regulatory agency in setting the maximum legal price a monopolist may charge: The socially optimal price is below average total cost (and either bankrupts the firm or requires that it be subsidized), while the higher, fair-return price does not produce allocative efficiency.
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