ECO105Y1 Study Guide - Midterm Guide: Carpool, Price Fixing, Unintended Consequences
Document Summary
Chapter 9: monopoly rules, governments regulation, competition and the law. Crown corporations also occur in industries deemed to be publicly important for political or social reasons. Each player in the prisoner"s dilemma is only better off confessing if he/she cannot trust the other player. Opec is not an illegal agreement because there is no international law on cartels that cross national borders. Competition tribunals will prevent a merger if the costs of decreased competition exceed the benefits of increased efficiencies. Penalties for criminal offences include prison sentences, for civil offences penalties are limited to fines and legal prohibitions. The discipline of market competition ensures that eventually consumers will stop buying products from businesses that produce harmful products. The additional benefits from regulation of industries like atomic energy and medicine exceed the costs. Prices in the airline and trucking industries fell after deregulation. Regulated industries were operating like a cartel, restricting output and raising prices.
