Investopedia

Continue to Site »

Rate Of Return Regulation

Filed Under » ,
Dictionary Says

Definition of 'Rate Of Return Regulation'

A form of price setting regulation where governments determine the fair price which is allowed to be charged by a monopoly. Rate of return regulation is meant to protect customers from being charged higher prices due to the monopoly's power, while still allowing the monopoly to cover its costs and earn a fair return for its owners
Investopedia Says

Investopedia explains 'Rate Of Return Regulation'

Customers benefit from prices that are reasonable, given the monopolists operating costs. Rate of return regulation is often criticized because it provides little incentive to reduce costs and increase efficiency. A monopolist who is regulated in this manner does not earn more if costs are reduced. Thus, customers may still be charged higher prices than they would be under free competition.

Articles Of Interest

  1.

    Utility Funds: A Bright Choice In Bear And Bull Markets

    Gas, electric and water companies' non-cyclical nature can power strong gains in any portfolio.

  2. Setting Vs. Getting: What Is A Price-Taker?

    Learn how the economic term "price taker" may separate investors from traders.

  3. Early Monopolies: Conquest And Corruption

    This structure can be very effective, but it is also known for its abuse of power.

  4. A History Of U.S. Monopolies

    These monoliths helped develop the economy and infrastructure at the expense of competition.

  5. Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.

  6. Should You Add A Securities License To Your Qualifications?

    Clients love planners who sell securities, but a securities license takes a lot of work. Learn if the stress and study are worth it.

  7. How To Report A Tax Cheat

    If you report a tax evader to the IRS, you could be eligible for a reward.

  8. GAAP And The IFRS Standards Convergence Efforts In 3 Substantial Areas

    Understand the specific steps that have been taken in hopes of converging the GAAP and the IFRS accounting standards, despite the philosophically and culturally based methodological differences ...

  9. How Much Will Your Taxes Rise Based On Your Salary?

    Find out how high your taxes will rise this year.

  10. Department Of Justice Sues Standard & Poor's Over Mortgage Crisis - Is Moody's Next?

    The U.S. Department of Justice sued Standard & Poor's and is seeking more than $5 billion in damages.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Abatement Cost

    A cost borne by many businesses for the removal and/or reduction of an undesirable item that they have created.

  2. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  3. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  4. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  5. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  6. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.
Trading Center