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Antitrust Policy and Regulation

18. Antitrust Policy and Regulation. Chapter Objectives. The Core Elements of the Major Antitrust (Antimonopoly) Laws in the United States Some of the Key Issues Relating to the Interpretation and Application of Antitrust Laws

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Antitrust Policy and Regulation

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  1. 18 Antitrust Policy and Regulation

  2. Chapter Objectives • The Core Elements of the Major Antitrust (Antimonopoly) Laws in the United States • 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

  3. Antitrust Policy • The Antitrust Laws • Historical Background • Regulatory Agencies • Sherman Act of 1890 • Clayton Act of 1914 • Price Discrimination • Tying Contracts • Interlocking Directorates

  4. Antitrust Policy • The Antitrust Laws • Federal Trade Commission Act of 1914 • Cease and Desist Orders • Wheeler-Lea Act 1938 • Deceptive Acts or Practices • Celler-Kefauver Act 1950 • Merger Regulation

  5. Policy Issues and Impacts • Issues of Interpretation • Focus on Monopoly Behavior or Structure • 1911 Standard Oil Case • 1920 U.S. Steel Case • Rule of Reason • 1945 Alcoa Case • How Broadly Should Markets be Defined? • 1956 DuPont Cellophane Case • Issues of Enforcement

  6. O 18.1 Effectiveness of Antitrust Laws • Monopoly • Microsoft Case • Mergers • Merger Types • Horizontal Merger • Vertical Merger • Conglomerate Merger

  7. Effectiveness of Antitrust Laws Types of Mergers Blue Jeans Automobiles Conglomerate Merger Blue Jeans Autos E F B D C A Z Y X W U V T Glass Denim Fabric Vertical Merger Horizontal Merger

  8. Effectiveness of Antitrust Laws • Merger Guidelines • The Herfindahl Index • Price Fixing • Per Se Violations • Price Discrimination • Tying Contracts

  9. Industrial Regulation • Natural Monopoly • Public Ownership • Public Regulation • Public Interest Theory of Regulation • Problems With Industrial Regulation • Costs and Inefficiency • Perpetuating Monopoly • Legal Cartel Theory • Deregulation

  10. Social Regulation • Distinguishing Features • Food and Drug Administration 1906 • Equal Employment Opportunity Commission 1964 • Occupational Safety and Health Administration 1971 • Environmental Protection Agency 1972 • Consumer Product Safety Commission 1972

  11. Social Regulation • Optimal Level of Social Regulation • In Support of Social Regulation • Criticisms of Social Regulation • Two Reminders • There is No Free Lunch • Less Government is Not Always Better than More

  12. United States v. Microsoft Last Word • Charges May 1998 • Windows Monopoly • District Court Findings • 95% of Intel PCs • Restrictive Contracts • District Court Remedy • Appeals Court Ruling • Final Settlement • No Break Up

  13. antitrust policy industrial regulation social regulation Sherman Act Clayton Act tying contracts interlocking directorates Federal Trade Commission Act cease-and-desist order Wheeler-Lea Act Celler - Kefauver Act Standard Oil case U.S. Steel case rule of reason Alcoa case DuPont cellophane case Microsoft case horizontal merger vertical merger conglomerate merger per se violations natural monopoly public interest theory of regulation legal cartel theory of regulation Key Terms

  14. Next Chapter Preview… Agriculture: Economics and Policy Chapter 19

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