the principal/agent problem

If government attempts to regulate a monopoly or oligopoly by forcing it to charge a price that provides a normal profit only, then the firm will have no incentive to minimize its costs since it is guaranteed a profit over whatever costs it incurs. This is called the principal/agent problem. An example of this is an old Soviet practice of measuring truck plant output by the total weight of trucks produced; as a result, the Soviet Union could boast of the heaviest truck designs on the planet.