Antitrust Policy and Regulation McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.. • Some of the Key Issues Relating to the Interpretation and Application of Antitru
Trang 1Antitrust Policy and Regulation
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc All rights reserved.
Trang 2• Some of the Key Issues Relating to the Interpretation and Application of
Antitrust Laws
• The Economic Principles and Difficulties Related to the Setting of Prices (Rates) Charged by So-Called
“Natural Monopolies”
• The Nature of “Social Regulation,” Its Benefits and Costs, and Its Optimal
Level
Trang 3Show
ANTITRUST POLICY AND REGULATION
Antitrust Policy Industrial Regulation Social Regulation
Trang 6• Section 2 - Price Discrimination
• Section 3 - Tying Contracts
• Section 7 – Stock Ownership
• Section 8 – Interlocking
Directorates
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THE ANTITRUST LAWS
Federal Trade Commission Act of 1914
• Established FTC
• Holds Hearings on Complaints
• Seeks Cease-and-Desist Orders
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THE ANTITRUST LAWS
Celler-Kefauver Act of 1950
• Strengthened Clayton Act
Regarding Asset Ownership in Competing Firms
• Anticompetitive Mergers Illegal
No Matter How Accomplished
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THE ANTITRUST LAWS
Issues of Interpretation
• Monopoly Behavior vs Structure
• Standard Oil Case – 1911
• U.S Steel Case – 1920
•Rule of Reason
• Alcoa Case - 1945
• Du Pont Cellophane Case
Issues of Enforcement: Tradeoffs Among Goals
• Balance of Trade
• Defense Cutbacks
• Emerging New Technologies
Trang 10Antitrust Policy
• Issues of interpretation
• Monopoly behavior or structure
• 1911 Standard Oil Case
• 1920 U.S Steel Case
• 1945 Alcoa Case
• The relevant market
• 1956 DuPont Cellophane Case
• Issues of enforcement
Trang 12Denim Fabric
Z Y
X W
V U
Trang 13Industrial Regulation
• Natural monopolies
• Economies of scale
• Public utilities
• Electricity, water, gas, phone
• Solutions for better outcomes
• Public ownership
• Public regulation
• Public interest theory of regulation
Trang 14State public utility
commissions (various years)
Electricity, gas telephones
*Originally called the Federal Power Commission, renamed in 1977
18-14
Trang 15Problems with Industrial
Regulation
• Regulators establish rates to give
natural monopoly “fair return”
• No incentive to reduce cost
Trang 16• Began in the 1970s
• Has produced large net benefits for
consumers and society
• Industries deregulated include:
Trang 17•Food & Drugs (1906)
Trang 18Social Regulation
• Concerned with the conditions under which goods and services are
produced
• Impact of production on society
• Physical qualities of goods
• Applied “across the board” to all
industries
Trang 19Social Regulation
Commission
Food and Drug Administration
(1906) Safety and effectiveness of food, drugs, and cosmetics
Equal Employment Opportunity
Commission (1964)
Hiring, promotion, and discharge
of workers
Occupational Safety and Health
Administration (1972) Industrial health and safety
Environment Protection Agency
(1972) Air, water, and noise pollution
Consumer Product Safety
Commission (1972)
Safety of consumer products
Trang 20• There is No Free Lunch!
• Less Government is Not Always Better than More
Trang 21• Appeals Court Ruling
• Final Settlement
– No Break Up