Bài giảng MicroEconomics - Chapter 18 Antitrust Policy and Regulation

.Antitrust Policy and RegulationMcGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Antitrust LawsThe purposePrevent monopolyPromote competitionAchieve allocative efficiencyHistorical backgroundRegulatory agenciesAntitrust lawsLO118-2Antitrust LawsSherman Act 1890Clayton Act 1914Outlaw price discriminationProhibit tying contractsProhibit stock acquisitionNo interlocking directoratesFederal Trade Commission Act 1914Wheeler-Lea Act 1938Celler-Kefauver Act 1950LO118-3Antitrust PolicyIssues of interpretationMonopoly behavior or structure1911 Standard Oil Case1920 U.S. Steel Case1945 Alcoa CaseThe relevant market1956 DuPont Cellophane CaseIssues of enforcementLO218-4Effectiveness of Antitrust LawsMonopolyAT&TMicrosoft CaseMergersHorizontal mergerVertical mergerConglomerate mergerLO218-5MergersAutomobilesBlue JeansAutosGlassBlueJeansDenimFabricACBDEFZYXWVUTHorizontal MergerConglomerate MergerVertical MergerLO218-6Merger guidelinesThe Herfindahl IndexPrice fixingPrice discriminationTying contractsLO2Mergers18-7Industrial RegulationNatural monopoliesEconomies of scalePublic utilitiesElectricity, water, gas, phoneSolutions for better outcomesPublic ownershipPublic regulationPublic interest theory of regulationLO318-8Industrial RegulationLO3Commission(Year Established)JurisdictionFederal Energy Regulatory Commission (1930)*Electricity, gas, gas pipelines, oil pipelines, water-powered sitesFederal Communications Commission (1934)Telephones, television, cable television, radio, telegraph, CB radios, ham operatorsState public utility commissions (various years)Electricity, gas telephones*Originally called the Federal Power Commission, renamed in 197718-9Problems with Industrial RegulationRegulators establish rates to give natural monopoly “fair return”No incentive to reduce costX-inefficiencyPerpetuate monopolyConditions of natural monopoly can endLegal Cartel TheoryLO318-10DeregulationBegan in the 1970sHas produced large net benefits for consumers and societyIndustries deregulated include:AirlinesRailroadsTelecommunicationsElectricityLO318-11Social RegulationConcerned with the conditions under which goods and services are producedImpact of production on societyPhysical qualities of goodsApplied “across the board” to all industriesLO418-12Social RegulationCommission(Year Established)JurisdictionFood and Drug Administration (1906)Safety and effectiveness of food, drugs, and cosmeticsEqual Employment Opportunity Commission (1964)Hiring, promotion, and discharge of workersOccupational Safety and Health Administration (1972)Industrial health and safetyEnvironment Protection Agency (1972)Air, water, and noise pollutionConsumer Product Safety Commission (1972)Safety of consumer productsLO418-13Social RegulationOptimal level of social regulationIn support of social regulationCriticisms of social regulationTwo remindersThere is no free lunchLess government is not always better than moreLO418-14