2. What is one difference between the four-firm concentration ratio and the Herfindahl index? 3. How does a vertical merger differ from a horizontal merger? Why would the government look more carefully at one than at the other? 4. Explain price regulation, profit regulation, and output regulation. 5. What is the major difference between the capture theory of regulation and the public interest theory of regulation? 6. What is the implication of saying that regulation is likely to affect incentives? 7. Discuss the advantages and disadvantages of regulation (as you see it). 8. It is usually asserted that public utilities such as electric companies and gas companies are natural monopolies, but an assertion is not proof. How would you go about trying to prove (or disprove) that electric companies and the like are (or are not) natural monopolies? (Hint. Consider comparing the ATC of a public utility that serves many customers with the ATC of a public utility that serves relatively few customers.)