C7S3: The Role of Government Main Idea: One of the economic functions of government in a market economy is to maintain competition.

C7S3: The Role of Government Key Terms: Trust Price discrimination Cease and desist order Public disclosure Sherman Antitrust Act Clayton Antitrust Act

C7S3: The Role of Government Antitrust Legislation US has passed laws to break up trusts Some companies previously used price discrimination to charge different prices to different customers, some still do

C7S3: The Role of Government Government Regulation Examples Cable, telephone, utilities are regulated Regulatory agencies are listed on page 180, fig. 7.4

C7S3: The Role of Government Government Regulation Governments can also tax companies for negative externalities, such as pollution

C7S3: The Role of Government Public Disclosure The government makes sure that companies tell the public about what they are doing Labels on food Stock trades made, company wealth The internet has created the ability to have indirect disclosure

C7S3: The Role of Government Modified Free Enterprise In the US, we have a modified free enterprise economy There is a mix of laissez-faire business with some government regulation

C7S3: Assignment Assignment #3: p.183, #3-6