Question

In the United States, public policies towards natural monopoly consists of which of the following?

No regulation of any monopoly.

Regulation of natural monopolies.

Laws that make monopolies illegal.

Government takeover of monopolies for excessive profits.

Answer 1

In the United States, public policies towards natural monopolies primarily consist of **regulation of natural monopolies**. Natural monopolies occur in industries where the nature of the market makes it inefficient to have more than one provider, such as utilities (water, electricity, natural gas).

To prevent the negative effects of monopolies, such as price gouging and reduced service quality, the government often intervenes through regulatory bodies that set prices, ensure adequate service levels, and oversee the operations of these monopolies.

While there are laws that make certain anti-competitive practices illegal (such as the Sherman Act), not all monopolies are deemed illegal in a natural monopoly context. Government takeover is not a common or standard policy approach, so it is also not a primary feature of public policy towards these entities.