Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 14, Problem 11DQ
To determine
The effect of a highly severe antitrust law.
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Some countries’ competition and antitrust policies are pro-competition and pro-consumer, whereas other countries’ policies are pro-incumbent and pro-producer. How do they differ?
U.S. antitrust laws are designed to prohibit monopolization and encourage competition. Why, then, does the government erect barriers to entry and create monopoly power by granting firms patents?
How antitrust policy and industrial organization is related?
Chapter 14 Solutions
Economics: Principles & Policy
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Similar questions
- Discuss key Antitrust legislation.arrow_forwardWhat do you see as the main costs and benefits of allowing a single firm to gain a monopoly in an industry as opposed to having government step in to break up the firm or prevent its expansion?arrow_forwardAntitrust laws are designed to…. A. Encourage monopolies B. Ensure the safety of food and beverages that people consume C. Allow for monopoly to gain complete control of a market D. Regulate monopoliesarrow_forward
- From the perspective of consumers and society overall, monopolies are worse than perfectly competitive markets. This is the major reason behind the existence of US antitrust laws. Describe a situation, however, where monopolies are good for consumers and why. (Hints: Is perfect competition always the right comparison? What kinds of costs typically lead to industries where a monopoly may benefit consumers?)arrow_forwardIf patents, copyrights, and trademarks reduce competition, why does the federal government grant them? What is a natural monopoly? Give two examples locally.arrow_forwardWhich of the following is a reason why American Ideology regarding antitrust policy has changed over the past few decades? Multiple Choice Fewer foreign firms face restrictions in their home countries Fewer Americans are involved in the political process More Americans are stockholders and benefit from monopolies More foreign producers provide competition for domestic producersarrow_forward
- Being the only producer in a monopoly market, can a monopolist charge a very high price to maximize profit? Why, or why not?From a societal point of view, can we claim that perfect competition and monopoly are equally efficient? Why, or why not? Explain.arrow_forwardUnsure which is the correct answer The Clayton Act of 1914 classifies several business practices as illegal, including price discrimination and tying contracts, if they "substantially lessen competition or tend to create a monopoly." The Clayton Act of 1914 is an example of which of the following? Price regulations or antitrust lawsarrow_forwardWhat is the usual shape of a marginal revenue curve for a monopolist? Why? When a monopolist identifies its profit-maximizing quantity of output, how does it decide what price to charge? Is a monopolist allocatively efficient? Why or why not? ALCOA does not have the monopoly power it once had. How do you suppose their barriers to entry were weakened? For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially monopolies. In a global market, where U.S. firms compete with firms from other countries, would this policy make the same sense as it might in a purely domestic context? If public utilities are a natural monopoly, what would be the danger in deregulating them? Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the benefit of consumers? In the middle of the twentieth century, major U.S. cities had multiple…arrow_forward
- Sorpresa! Business, Inc., a U.S. firm, may have committed, in Mexico, acts that would constitute, in the United States, violations of U.S. antitrust laws. These laws apply? A) extraterritorially. B) only to signatories of the North American Free Trade Agreement. C) only to members of the World Trade Organization. D) only within U.S. borders.arrow_forwardWhich of the following is true of antitrust laws in the United States? Group of answer choices Economists unanimously agree on the usefulness of antitrust action to increase the competitiveness of industries. They were embedded in the U.S. Constitution but mostly eliminated in the early 1900s. The Sherman Act in 1980 eliminated and repealed all existing U.S. anti-trust laws. Historically they have been abused by some competitors going after other competitors in ways that are detrimental to consumers.arrow_forward
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