Chapter 11 - Assignment 2: The Regulation of California's Electric Industry

1. Explain why the author of this document claims that there are "good" and "necessary" monopolies. Use a diagram to illustrate the shape of the long-run average cost curve for such a firm.
2. Why might it be appropriate to maintain the distribution of electricity as a regulated monopoly while allowing competition in the generation and sale of electricity? Explain the argument behind this "unbundling."