Econ test 4

characteristics of MC

- Significant numbers of sellers in a highly competitive market

- Differentiated products- shampoos, clothing, etc.

- Sales promotion and advertising

- Easy entry and exit of new firms in the long run

example of MC

resturants, retail trade

CHARACTERISTICS OF OLIGOPOLY - 2;

1. small number of firms

2. interdependence (strategic dependence)

EXAMPLES OF OLIGOPOLY

ford, general motors, gum companies

TYPES OF MERGERS – VERTICAL

Vertical mergers: two companies join that may not compete with each other, but exist in the same supply chain, like Amazon and Whole Foods. 

TYPES OF MERGERS — HORIZONTAL

Horizontal: joining of firms that are selling/producing a similar product Disney and Pixar, and conglomerates

2 TYPES OF GOVERNMENT REGULATION

1. Economic Regulation- government oversees and gets to regulate prices of natural monopolistic firms. It also applies to non-monopolistic firms

2. Social Regulation- focuses on improved working conditions and improved products. Applies to all firms.

FEDERAL AGENCIES

Federal Trade Commission (FTC) (product markets 1914): Responsible for preventing businesses from engaging in misleading advertising, unfair trade practices, and monopolistic actions, as well as for protecting consumer rights. 

Food and Drug Administration (FDA) (Food and pharmaceuticals 1938) regulates the quality and safety of foods, health and medical products, pharmaceuticals, cosmetics, and animal feed. 

Equal Employment Opportunity Commission (EEOC) (Labor markets 1964): Investigates complaints of discrimination based on race, religion, gender, or age in hiring, promotion, firing, wages, testing, and all other conditions of employment.

 Environmental Protection Agency (EPA) (Environment 1970): Develops and enforces environmental standards for air, water, waste, and noise.

 Occupational Safety and Health Administration (OSHA) (Health and safety 1970): Regulates workplace safety and health conditions. 

Consumer Product Safety Commission (CPSC) (Consumer product safety 1972): Responsible for protecting consumers from products posing fire, electrical, chemical, or mechanical hazards or dangers to children. 

Mining Enforcement and Safety Administration (Mining and oil 1973): Establishes and enforces drilling safety operational safety rules for mines and oil rigs.

CREATIVE RESPONSE

behavior on the part of a firm that allows it to comply with the letter of the law but violate that spirit, significantly lessening the law's effects

CAPTURE HYPOTHESIS

suggests that regulators end up being won over by the very industry they’re over seeing

SHARE-THE-GAINS, SHARE-THE-PAINS THEORY

argues that the captured theory isn’t going to happen and it’s too risky

ANTITRUST LAWS – 4

- Sherman Antitrust Act of 1890- first antitrust act and still used today (critiqued for being vague)

- Clayton Act

- Federal Trade Commission Act of 1914

- Robinson-Patman Act of 1936 (amended the Clayton Act)

EXEMPTIONS

- Labor unions

- Public utilities- electric, gas, and telephone companies

- Professional baseball

- Hospitals

LABOR UNIONS - TYPES

1. Craft Unions- all members have the same craft or skill (plumbers)

2. Industrial Union- all come from the same industry (United Auto Workers)

3. Public Sector Employee Unions- (teachers, police, firefighters)

COLLECTIVE BARGAINING

negotiation between the management of a company and a union to reach a mutually agreeable contract

UNION MEMBERSHIP TRENDS

-98% of the time labor contracts get signed, only 2% of the time unions go on strike

-Labor unions are down to 10% today and were at their highest from the 1940s - 1960s (peak)

LABOR UNION

worker organizations that seek to secure economic improvements for their members.