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Complete Principles of Economics I/Microeconomics Notes Part 12 - Got 93% in the course!

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Department
Economics
Course
ECON 1131
Professor
All Professors
Semester
Fall

Description
Microeconomics Notes: Chapter 18 Keely Henesey Antitrust Laws: − Purpose of Antitrust Policy  ▯prevent monopolization, promote competition, and achieve  allocative efficiency −  1870s/80s : dominant firms formed, some known as trusts (business combinations that assign  control to single decision group of “trustees”) o Trusts often used questionable tactics in consolidating and then charged high prices to  customers/extracted price concessions from resource suppliers −  Late 1800s/Early 1900s : government concludes monopolized industries lack market forces  necessary to protect consumers and achieve competition/allocative efficiency; thus, they create  two means of control as substitutes for, or supplements to, market forces: o Regulatory Agencies  ▯ natural monopolies; seek to control economic behavior o Antitrust Laws  ▯seek to inhibit/prevent growth of monopoly − Four Major Pieces of Legislation That Constitute Basic Law Relating to Monopolies: Sherman Act (1890) Clayton Act (1914) Federal Trade  Celler­Kefauver  Commission Act (1914) Act (1950) Amended Section 7  Cornerstone of antitrust  Clarification of Sherman Act (Sought to  With amendment, created FTC  of Clayton Act (ALL  legislation (Sought to break uoutlaw techniques firms might use to  and outlawed false/misleadinganticompetitive  existing monopolies) develop monopoly power) sales practices mergers are  prohibited) − Outlawed restraints of trade ach of the Sections Outlaw… (if the  − FTC has power to investigat− Amends S7 of  result is less competition) (collusive price­ anticompetitive practices on Clayton Act by  fixing/dividing up markets) − S.2: price discrimination not justified bits own or at request of  ALSO prohibiting  and monopolization cost­differences injured firms (can hold  one firm from  − Courts can break up  − S3: tying contracts (where producer  hearings/issue cease­and­ obtaining physical  monopolies, prohibit  requires buyer to buy another of its  desist orders where it  assets of another  anticompetitive practices, &  products for desired product) discovers these practices) firm fine/imprison violators −  Wheeler­Lea Act : (1938)  − S7: acquisition of stocks of competing  amendment allows FTC to  − Injured parties can sue  corporations police false/misleading sales  perpetrators for treble  − S8: formation of interlocking­ practices damages (awards of 3x the  directorates (where director of one firm  monetary injury done to  is a board member of a competing firm)  them) in large corporations Antitrust Policy: Issues & Impacts − Issues of Interpretations…  o (1) Should the focus of antitrust policy be on monopoly behavior or structure? o (2) How broadly should markets be defined in antitrust cases? − Monopoly Behavior Vs. Monopo
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