Efficiency Analysis and Regulate Price of Natural Monopoly Industry

Based on the asymmetric information, this paper analyzed the price-regulation and efficiency lose of natural monopoly industry, and also compared the changing of consumer surplus and social welfare between regulation and unregulation. It drew the conclusion that even though the asymmetry caused efficiency loss of government's rules on the natural monopoly industry, the economy efficiency with government's regulation on monopoly industry is higher than that with monopoly industry.