To provide incentives for increased efficiency, several regulatory agencies have eliminated ceilings on the profits of regulated

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To provide incentives for increased efficiency, several regulatory agencies have eliminated ceilings on the profits of regulated firms but instead put caps on their prices. Suppose that a regulated firm manages to cut its prices in half, but in the process it doubles its profits. Should rational consumers consider this to be a good or a bad development? Why?
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Economics Principles and Policy

ISBN: 978-0538453653

12th edition

Authors: William J. Baumol, Alan S. Blinder

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