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

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

3. 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

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

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

6. 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

7. 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

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