Which of the following is true about regulatory risk? I. It refers to the potential for the regulator to holdup the firm beforeit has made its sunk investments.II. An important objective in designing regulatory institutions and enabling legislation is to minimize regulatory risk.

MCQs on major topics and theories in the field of Industrial Organization. Topics include: Market structure analysis and the strategic behaviors of competing firms, including (but not limited to) product differentiation, collusion, price discrimination, pricing strategy, non-price discrimination (i.e. advertising), horizontal mergers, vertical integration, and vertical restraints.