If a natural monopoly like SMUD, with declining long run ATC, was forced to break up into several small competitive firms, the Price charged by the competitive firms should decrease as the firms become more efficient. Total production for the industry should increase because of the generated by increased competition.

If a natural monopoly like SMUD, with declining long run ATC, was forced to break up into several small competitive firms, the Price charged by the competitive firms should decrease as the firms become more efficient. Total production for the industry should increase because of the generated by increased competition.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter12: Monopoly

Section: Chapter Questions

Problem 1DQ

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