ECON 103 Lecture Notes - Lecture 9: Sherman Antitrust Act, Clayton Antitrust Act, Economic Efficiency
18 Aug 2018
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Chapter 5: difficult cases for the market, and the role of government. Economic efficiency: to assess the desirability of economic outcomes. To be economically efficient: all actions generating more benefits then costs should be undertaken, no actions generating more costs then benefits should be undertaken. The economic role of government functions of government are legitimate: protecting individuals and their property against invasions by others, providing goods that cannot easily be provided through private markets. Market failure: lack of competition, competition is vital to the proper operation of the pricing mechanism, with no competition, a firm can hold back production and raise price. Role for government: refrain from activities that reduce competition: licenses, price controls, etc, antitrust legislation: united tates has enacted a series of (cid:862)antitrust laws,(cid:863) Clayton act (1914) making it illegal for firms to collude or attempt to monopolize a market. Many economists believe that, by and large, government policy in this area has been ineffective: externalities.
