Chapter+11

ECONOMICS: GOVERNMENT AND PRODUCT MARKETS - ANTITRUST AND REGULATION

Introduction to Topics

  • Dealing with Monopoly Power
  • Antitrust Laws
  • Regulation

Antitrust Overview

  • Antitrust Law: Legislation aimed at controlling monopoly power and promoting competition. Monopoly Characteristics:
    • Produces less output than a perfectly competitive firm with equivalent revenue and cost structures.
    • Charges higher prices.
    • Causes a deadweight loss in the market.

Significant Antitrust Acts

  • Sherman Act (1890)
  • Clayton Act (1914)
  • Federal Trade Commission Act (1914)
  • Robinson-Patman Act (1936)
  • Wheeler-Lea Act (1938)
  • Celler-Kefauver Anti-merger Act (1950)

Sherman Act (1890)

  • Introduced amidst the rise of company mergers. The term “trust” emerged from these combinations of firms that acted like monopolists.
  • Key Provisions:
    1. "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal."
    2. "Every person who monopolizes, attempts to monopolize, or conspires with others to monopolize any part of trade or commerce shall be guilty of a misdemeanor."
  • Criticism: Vague language, failing to clarify what constitutes a