regulatory policy

Market Power

A company’s ability to control prices above competitive levels or restrict output or quality.

Monopolies

Market structures where a single firm has significant market power.

Oligopolies

Market structures characterized by a few firms dominating the market, often with similar products.

Predatory Pricing

Selling a product below cost for a short period of time to drive competitors out of the market.

Antitrust Laws

Laws that promote competition in the marketplace and prevent monopolistic practices.

Sherman Antitrust Act (1890)

Outlawed mergers and monopolies that limit trade between states.

Merger

Occurs when a company joins with another company or companies to form a single firm.

Deregulation

The government no longer decides what role each company can play in a market and how much it can charge.

Regulation

A policy designed to promote economic stability, efficiency, and reduce negative externalities.

Spill-over Costs

Social costs or negative externalities that exist in many industries.

Federal Trade Commission (FTC)

A U.S. agency that enforces antitrust laws and promotes consumer protection.

Consumer Product Safety Act (1973)

Legislation aimed at protecting consumers from hazardous products.

Federal Reserve (1913)

The central bank of the U.S. responsible for regulating the nation's money supply.

Lender of Last Resort

A role of the Federal Reserve to provide liquidity to banks in distress.

Capture Theory

The view that regulatory agencies may be influenced by the industries they regulate.

Revolving Door

The movement of individuals between the public sector and private industry.

Market-Based Regulations

Using prices, taxes, and subsidies to encourage producers and consumers to act in a certain way.

Cap and Trade

An environmental policy that sets a cap on emissions and allows industries to trade emission permits.

Incentives

Actions or policies designed to encourage specific behaviors from producers or consumers.

Negative Externalities

Unintended adverse effects of economic activities on third parties.

Corporate Mergers

Consolidation of businesses which can lead to efficiencies but may restrict competition.

Guidelines for Proposed Mergers (1992)

Regulatory framework established to evaluate mergers based on potential market power.

Marginal Benefits/Costs

The additional gains or losses from consuming or producing one more unit of a good or service.

Consumer Financial Protection Bureau (2010)

A regulatory agency formed to protect consumers in the financial sector.

Natural Monopolies

Industries where single-firm production can lead to lower average costs.

Friedrich von Hayek

Economist known for his defense of free-market capitalism and criticism of government regulation.

Boom and Bust Cycles

Economic cycles of rapid growth followed by downturns.

“Too Big to Fail”

A concept referring to financial institutions whose failure would have devastating effects on the economy.