LESSON 7.3 Antitrust, Economic Regulation, and Competition

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Presentation transcript:

LESSON 7.3 Antitrust, Economic Regulation, and Competition CONTEMPORARY ECONOMICS 4/17/2017 Objectives LESSON 7.3 Antitrust, Economic Regulation, and Competition Explain the goal of U.S. antitrust laws. Distinguish between the two views of government regulation. Discuss why U.S. markets have grown more competitive in recent decades. CONTEMPORARY ECONOMICS: LESSON 7.3 LESSON 7.3

LESSON 7.3 Antitrust, Economic Regulation, and Competition Key Terms LESSON 7.3 Antitrust, Economic Regulation, and Competition antitrust activity merger deregulation CONTEMPORARY ECONOMICS: LESSON 7.3

U.S. Antitrust Activity Promote the market structure that will lead to greater competition Reduce anticompetitive behavior CONTEMPORARY ECONOMICS: LESSON 7.3

Antitrust Laws Sherman Antitrust Act of 1890 Clayton Act of 1914 Federal Trade Commission (FTC) Act of 1914 CONTEMPORARY ECONOMICS: LESSON 7.3

Mergers and Antitrust A merger is the combination of two or more firms to form a single firm. Horizontal mergers involve firms in the same market. Nonhorizontal mergers include all other types of mergers. CONTEMPORARY ECONOMICS: LESSON 7.3

Flexible Merger Policy New government approach allows big companies to merge if the combination is more efficient or more competitive with other big firms in the market. CONTEMPORARY ECONOMICS: LESSON 7.3

Regulation of Natural Monopolies The regulation of natural monopolies tries to control price, output, the entry of new firms, and the quality of service in the industry in which monopoly appears inevitable or even desirable. CONTEMPORARY ECONOMICS: LESSON 7.3

Two Views of Government Regulation Regulation in the public interest Regulation promotes social welfare by reducing the price and increasing the output when a market is served most efficiently by one or just a few firms. Regulation in the special interest Well-organized producer groups expect to profit from government regulation by persuading public officials to impose restrictions that these groups find attractive. CONTEMPORARY ECONOMICS: LESSON 7.3

Competitive Trends in the U.S. Economy Antitrust activity Deregulation International trade Technological change CONTEMPORARY ECONOMICS: LESSON 7.3

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