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A Common Feature of Regulated Industries Is Cross-Subsidization, Which Is

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A common feature of regulated industries is cross-subsidization, which is a situation when one group of customers pays prices above costs while another group of customers pays prices below costs. The one group is subsidizing the other group. Is this practice more consistent with the capture hypothesis or the share-the-gains, share-the-pains theory? Explain.


Definitions:

Diathesis-Stress Model

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Biopsychosocial Approach

An integrative model for understanding human health and illness that considers biological, psychological, and social factors.

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