Government Regulation of Monopolies and Competition

Monopoly

The possession or control of the supply of a commodity or service, effectively resulting in 1 seller in a market with no competition.

Natural Monopoly

A type of monopoly where the cost of entering the market is higher than firms are willing to pay.

Government Monopoly

A type of monopoly where the government controls the supply of a commodity or service.

Geographic Monopoly

A type of monopoly where a single entity is the ONLY provider of a particular good or service in a specific geographic area.

Technological Monopoly

A type of monopoly that occurs when a company controls a specific technology or production method.

Monopsony

A market situation in which there is only one buyer.

De facto Monopoly

A situation where a single company dominates a market due to factors such as brand loyalty or high start-up costs for potential competitors.

Single Seller

A characteristic of monopolies where there is only one seller in the market.

Price Controller

A characteristic of monopolies where the seller has the ability to control prices for the entire market.

Barriers to Entry

A characteristic of monopolies where the cost of entering the market is higher than firms are willing to pay.

Lack of Substitutes

A characteristic of monopolies where there are no available substitutes for the commodities or services sold by the monopoly.

Reduced Competition

An issue with monopolies that can lead to complacency and a lack of incentive for the monopolistic firm to improve products or services.

Higher Prices for Consumers

An issue with monopolies where prices can be raised to unaffordable levels for some consumers due to lack of choice.

Inefficient Resource Allocation

An issue with monopolies where there is no pressure to optimize costs, leading to inefficient allocation of resources.

Lack of Innovation

An issue with monopolies where there may be less incentive to innovate, hindering technological progression.

Federal Trade Commission (FTC)

An independent agency of the United States government focused on enforcing civil antitrust law and promoting consumer protection.

Antitrust Division of the Department of Justice

Similar to the FTC, this division within the DOJ has exclusive jurisdiction over federal antitrust cases.

World Health Organization (WHO)

An international regulatory body focused on global health issues.

Sherman Antitrust Act

Legislation that authorized the federal government to dissolve trusts to prevent monopolistic practices.

Clayton Act

Legislation defining unethical business practices like price fixing and monopolies, protecting labor rights.

Federal Trade Commission Act

Established the FTC to protect consumers, promote competition, and prohibit unfair trade practices.

Price Controls

Regulatory measures where the government sets controls on prices to prevent companies from overcharging consumers.

Breakup

A regulatory measure where a company deemed too powerful can be split into smaller independent entities.

Blocking Mergers and Acquisitions

A regulatory measure to prevent mergers or acquisitions that could lead to monopolistic control.

Frictional

A type of unemployment when workers leave their old jobs but haven’t yet found new ones

Structural

A type of unemployment when shifts in thr economy create a mismatch between the skills worked have and the skills needed by the employers

Cyclical

A type of unemployment caused by the contraction phase of the business cycle