Types of Regulation:

The alternative to these first and second best solutions is the methods of direct regulation such as:  

1.  Rate of Return Regulation: allows monopolies to achieve a specified rate of return over cost.  

2.  Price-cap Regulation: a fixed price ceiling.
 
However, against all these mechanisms  privatization has been proposed as a better alternative by many researchers. It is argued that it ensures deconcentration of economic power, which complements the process of political decentralization. However, this issue has generated lot of intense debate.