Question
how can I respond to this post? Nevada Energy is a natural monopoly utility that is in Las Vegas, NV. They are a natural monopoly
how can I respond to this post?
Nevada Energy is a natural monopoly utility that is in Las Vegas, NV. They are a natural monopoly because if you bring 2 firms into the market, it will cost more to the consumer to have more than one firm.
- What characteristics of the natural monopoly industry you identified make it similar to a market monopoly?
Because of the market structure (monopoly) and because of the natural monopoly is why we have a market monopoly. A utility, such as Nevada energy, is a natural monopoly and the only firm that most people can use in Las Vegas because they live in their grid and there are no competitors other than solar power panels.
- What is the impact of monopoly power on you as a customer?
There could be a huge impact on a customer using Nevada Energy because if NE has market power, which it does, it can raise prices as it pleases and keep all their customers because there are no other options for them. If you have someone on SSI and have a certain amount of money allotted for their utilities, this could be a huge hit to their finances.
- Why does the government choose to regulate some natural monopolies rather than ban them? Is this ethical?
If they broke up a natural monopoly such as Nevada Energy, it would raise the ATC because another company would have to come in and there would be more costs associated with it so the government will choose to regulate the firm with price regulations. "Price regulation limits the price that a monopolist is allowed to charge." Is it ethical, maybe, maybe not, but there needs to be power for people through the grid and until there is a cheaper substitute, we can all hope that the government is doing what they should be doing for their people.
- How might such regulation be structured to benefit both the producers and the consumers?
They may impose a price ceiling. With a price ceiling the firm can still charge over their MC and at least break even while still producing and the consumer will have the comfort of knowing the they Nevada Energy can't continue to charge the people of Las Vegas whatever price they please.
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