TAILIEUCHUNG - Lecture Economics (19/e) - Chapter 18: Antitrust policy and regulation
In this chapter, students will be able to understand: List and explain the core elements of the major antitrust (antimonopoly) laws in the United States, describe some of the key issues relating to the interpretation and application of antitrust laws, identify and explain the economic principles and difficulties relating to the setting of prices (rates) charged by so-called natural monopolies, discuss the nature of "social regulation," its benefits and costs, and its optimal level. | . Antitrust Policy and Regulation McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Antitrust Laws The purpose Prevent monopoly Promote competition Achieve allocative efficiency Historical background Regulatory agencies Antitrust laws LO1 18- Antitrust Laws Sherman Act 1890 Clayton Act 1914 Outlaw price discrimination Prohibit tying contracts Prohibit stock acquisition No interlocking directorates Federal Trade Commission Act 1914 Wheeler-Lea Act 1938 Celler-Kefauver Act 1950 LO1 18- Antitrust Policy Issues of interpretation Monopoly behavior or structure 1911 Standard Oil Case 1920 . Steel Case 1945 Alcoa Case The relevant market 1956 DuPont Cellophane Case Issues of enforcement LO2 18- Effectiveness of Antitrust Laws Monopoly AT&T Microsoft Case Mergers Horizontal merger Vertical merger Conglomerate merger LO2 18- Mergers Automobiles Blue Jeans Autos Glass Blue Jeans Denim Fabric A C B D E F Z Y X W V U T Horizontal Merger Conglomerate Merger Vertical Merger LO2 18- Merger guidelines The Herfindahl Index Price fixing Price discrimination Tying contracts LO2 Mergers 18- Industrial Regulation Natural monopolies Economies of scale Public utilities Electricity, water, gas, phone Solutions for better outcomes Public ownership Public regulation Public interest theory of regulation LO3 18- Industrial Regulation LO3 Commission (Year Established) Jurisdiction Federal Energy Regulatory Commission (1930)* Electricity, gas, gas pipelines, oil pipelines, water-powered sites Federal Communications Commission (1934) Telephones, television, cable television, radio, telegraph, CB radios, ham operators State public utility commissions (various years) Electricity, gas telephones *Originally called the Federal Power Commission, renamed in 1977 18- Problems with Industrial Regulation Regulators establish rates to give natural monopoly “fair return” No incentive to reduce .
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