Price cap regulation does not provide incentives to firms to minimize their costs because firms cannot change prices. sets the maximum price these firms can charge. gives firms the incentive to exaggerate their costs. Both answers does not provide incentives to firms to minimize their costs because firms cannot change prices and gives firms the incentive to exaggerate their costs are correct. Both answers does not provide incentives to firms to minimize their costs because firms cannot change prices and sets the maximum price these firms can charge are correct.