Market Structures and Characteristics/ Antitrust Laws

Sherman Act of 1890

Restricts interstate restraint of trade and attempt to monopolize

Federal Trade Commission Act (1914)

Created FTC to help enforce antitrust laws

Clayton Act of 1914

Strengthened Sherman Act, outlawed certain anticompetitive practices not prohibited by the Sherman Act, including price discrimination, tying contracts, exclusive dealing, interlocking directorates, and buying the corporate stock of a competitor

trust

A monopoly that controls goods and services, often in combinations that reduce competition.

Monopoly

Complete control of a product or business by one person or group; one seller

Robinson-Patman Act (1936)

Limits price "concessions,"especially to large buyers, if one or more competitors will be harmed

concessions

agreements made in response to demands

Celler-Kefauver Act (1950)

limited any corporate mergers and joint ventures that reduced competition

Pure Competition Characteristics

-MANY sellers

-NO product differentiation

-NO pricing power

-NO long run economic profit

-NO barriers to entry

Monopolistic Competition Characteristics

-MANY sellers

-SOME product differentiation (real or perceived)

-VERY LITTLE pricing power

-NO long run economic profit

-NO/LOW barriers to entry

monopolistic competition

a market structure in which many companies sell products that are similar but not identical

pure competition

the market structure that exists when there are many small businesses selling one standardized product

Oligopoly

A market structure in which a few large firms dominate a market; limited competition

Oligopoly Characteristics

-FEW sellers

-YES (cars)OR NO (steel) product differentiation

-MUCH pricing power

-YES long run economic profit

-YES/HIGH barriers to entry

product differentiation

a positioning strategy that some firms use to distinguish their products from those of competitors

Monopoly Characteristics

-ONE sellers

-NO product differentiation

-TOTAL pricing power

-YES long run economic profit

-YES/HIGH barriers to entry

perfect competition

theoretical market structure characterized by a large number of WELL-INFORMED independent buyers and sellers who exchange identical products and have freedom of entry and exit