Luxcotta Research Paper

Antitrust laws are federal and state government laws that regulate the conduct and organization or businesses. This helps promote fair competition for consumers. There are four main areas involving the

In Document 4 “A Call to Action,” by James B. Weaver, it explained to the public through the author's thoughts of that monopolies had too much power and that the monopolies destroy competition and trade. This book was written at the time of when big corporations were taking over and destroying competition. Also, the author goes into detail that they control the price of the raw material, so they can produce their products at a low price and sell it at a low price. By selling that the lowest price, the competitors can not compete are driven out of business or reduce the wages of the workers. This idea can be related to current times were big corporations, such as Walmart, are destroying competition because they lower their prices that the competitors cannot compete with.

Monopolies are quite dangerous economically, and are usually broken up by the federal government, with only two exceptions- electricity, and gas. These are modern examples. A monopoly is the economic term for when a company that makes a product has no competition, and can raise the prices as high as they want. For example, the most obvious and powerful monopoly of the industrial revolution was the railroad monopoly. They made money quite quickly as a shipping company, and destroyed any and all competition as the only transcontinental railroad at the time. It’s leader, Cornelius Vanderbilt came to be considered one of the most powerful people of all time, due to his control over who he shipped for.

Moreover it is likely that the oligopolists act together and this way they will be maximising industry profits, by turning prices very high, this will also be negative for consumers.

This is where industry regulations come. The regulations discourages the monopolies and oligopolies from charging unfair prices for their products.

There are different types of businesses, for example, some use monopolies, trust and pools, while other eliminate competition for higher prices. As stated in “Progressive reformers regarded regulation as a cure for all sorts of socioeconomic and political problems” , “The Sherman Act of 1890 attempted to outlaw the restriction of competition by large companies that co-operated with rivals to fix outputs, prices, and market shares, initially through pools and later through trusts” , meaning, competition is the

The restraint against monopolies help

The first concept I am going to discuss is an oligopoly. There are several characteristics that make up an oligopoly. One characteristic is that there are many firms in the industry but only a few firms that make up the majority of the market share. In the United States soda market, three firms (Coca-Cola, Pepsi, and Dr. Pepper Snapple Group) make up almost ninety percent of the market (Schiller, 246). Another characteristic is that in an oligopoly, the oligopolists have substantial influence over price (though one oligopolist is usually the price leader). This market power is determined by the number of producers in the industry, the

The antitrust laws are the basis of this national policy. These laws, enforced by both the federal and state governments, require companies to compete in the marketplace. The Sherman Act, the first federal "antitrust law," was enacted in 1890, at a time when there was enormous concern about "trusts" -- combinations of companies that were able to control entire industries. Since then, other laws have been enacted to supplement the Sherman Act, including the Federal Trade Commission Act and the Clayton Act (1914). With some revisions, these laws still are in effect today. They have the same basic objective: making sure there are strong economic incentives for businesses to operate efficiently, keep prices down, and keep quality up.

The prices should reflect what a consumer is willing to pay. For an example, the EPI pens, which is a life saving device for many people with severe allergies including myself. The public and many politicians have recently been outraged by the high cost of the Epi-Pens. Contemplate in purchasing one for myself because, of the marked-up price of the Epi-pens, and since it has been rise about 25% per year for nearly a decade. Even though the officially is offering a generic brand one that would lower the price and, one might expected it to be at an affordable drug to all consumers. The fact is, people are refusing to buy them at their new prices, although many people are at risk of being without a life saving drug. But the, demand is designed

The government has laws in place to prevent this from happening. It has antitrust laws as well as laws to prevent price gouging. Price gouging is substantially raising the price of a product when it is in high demand or extremely low supply. The antitrust laws prevent one business from becoming too big and preventing fair competition. They also prohibit a variety of practices that restrain trade, such as price-fixing conspiracies, corporate mergers likely to reduce competition of particular markets. In a laissez faire society none of these laws would exist, so the people of those societies would be getting the short end of the stick, so to

Natural monopolies are cases in which production costs, infrastructure, and demand structure lead to a single monopolizing firm producing the good at lower cost than any other arrangement. Under such situations, firms will tend to over-charge and under-supply, causing a reduction in social surplus and an inefficient distribution of goods. A lack of competition is a fundamental violation of the idealized market assumptions. Little or no competition leads to inefficiencies of production and operation (Weimer and Vining p. 102). Furthermore, natural monopolies give an unfair and non-competitive advantage to firms that have entered the industry first. In cases of natural monopolies, government must typically regulate private industry in an attempt to maximize surplus, or, alternatively, government may provide the good or service publicly.

Oligopoly usually exists where few large firms producing a homogeneous or differentiated product dominate a market. A few examples are automobile and gasoline industries. To think of oligopoly “of circumstances in which this is not a sensible assumption. In particular, where a small number of large firms dominates a particular industry producing identical or closely substitutable products, one would expect the likely response of other firms to be a major factor influencing any price and output decision” (Maurya, 2008, pg.170). A few large firms would, each must consider its rivals’ reactions in response to its decisions about prices, output, and advertising. They would have to consider the standardized or differentiated products. Entry is usually hard

Under oligopolistic market structure, the government has a greater role as it acts as a guard to anti-competitive behaviours of the oligopolists. It is often observed that oligopolists may engage in the illegal practice of collusion, where they together make production and pricing decisions. Oligopolists may start acting as a single organisation and further increase prices and profits. Thus, in such environment, the government requires to keep a watch on such activities to curb the illegal

Traditional theory suggests that a firms’ main objective is profit maximization. Therefore, prices will be set in line to meet this objective. A monopoly is defined as one dominant firm in the industry. In theory, a monopoly will have inelastic demand due to no available substitutes. Therefore the firm will be a “price maker”.