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Copyright 2008 The McGraw-Hill Companies30-1
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
30Antitrust Policy and Regulation
Copyright 2008 The McGraw-Hill Companies30-2
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
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
Copyright 2008 The McGraw-Hill Companies30-3
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
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Antitrust Policy• The Antitrust Laws
–Historical Background
–Regulatory Agencies
–Sherman Act of 1890
–Clayton Act of 1914• Price Discrimination
• Tying Contracts
• Interlocking Directorates
Copyright 2008 The McGraw-Hill Companies30-4
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
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
Copyright 2008 The McGraw-Hill Companies30-5
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
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
Copyright 2008 The McGraw-Hill Companies30-6
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
Effectiveness of Antitrust Laws
• Monopoly–Microsoft Case
• Mergers–Merger Types
•Horizontal Merger
•Vertical Merger
•Conglomerate Merger
O 30.1
Copyright 2008 The McGraw-Hill Companies30-7
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
Effectiveness of Antitrust Laws
Automobiles Blue Jeans
Types of Mergers
Autos
Glass
BlueJeans
DenimFabric
A CB D E F
ZYXWVUT
Horizontal Merger
Conglomerate Merger
Vertical Merger
Copyright 2008 The McGraw-Hill Companies30-8
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
Effectiveness of Antitrust Laws
• Merger Guidelines–The Herfindahl Index
–Price Fixing• Per Se Violations
–Price Discrimination
–Tying Contracts
Copyright 2008 The McGraw-Hill Companies30-9
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
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
Copyright 2008 The McGraw-Hill Companies30-10
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
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
Copyright 2008 The McGraw-Hill Companies30-11
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
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
Copyright 2008 The McGraw-Hill Companies30-12
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
United States v. Microsoft
• 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
Last
Word
Copyright 2008 The McGraw-Hill Companies30-13
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
Key Terms• 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
Copyright 2008 The McGraw-Hill Companies30-14
Antitrust PolicyPolicy Issues and ImpactsEffectiveness of Antitrust LawsIndustrial RegulationsSocial RegulationLast Word
Key Terms
End Show
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Agriculture: Economics and Policy
