Question

The electric industry in many states is about to be deregulated -- meaning that customers will potentially be able to purchase electricity from more than one provider. Will the breakup of the monopoly structure be a good or a bad thing for the small electric consumer? (Hint: If you are looking for an example of how not to deregulate, take a look at the California example.)

Answer 1

This will be bad for the small consumers are the price of electricity distributed will be considerably high, electricity firm in the market are natural monopoly that means they can produce the goods at a lower price then several smaller firms will do, so many smaller firms selling the goods will be more costly because they do not have any economies of scale to cheaper goods.