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CHAPTER THIRTY-TWO ANTITRUST POLICY AND REGULATION INSTRUCTIONAL OBJECTIVES After completing this chapter, students should be able to: 1. Explain the term industrial concentration (as distinct from “pure monopoly”). 2. State the major arguments in the defense of industrial concentration. 3. State the major arguments in the case against industrial concentration. 4. Outline the major provisions of each of the following: Sherman Act, Clayton Act, Federal Trade Commission Act, Celler-Kefauver Act, and patent laws. 5. Identify major issues in antitrust enforcement by reviewing decisions in U.S. Steel, Alcoa, and du Pont cellophane Supreme Court cases. 6. Identify three current economic goals that may conflict with strict enforcement of antitrust laws. 7. Analyze effectiveness of antitrust laws by noting how they have been applied to existing market structures, mergers, and price fixing. 8. Distinguish between three types of merger. 9. Explain how the Herfindahl index is used as a guideline by the government in deciding whether to permit horizontal mergers. 10. Explain two major problems encountered in regulating natural monopolies. 11. Differentiate between social and industrial regulation. 12. State the major arguments for and against social regulation. 13. Explain the intent of government industrial policy and summarize the views of proponents and critics of such policies. 14. Define and identify terms and concepts listed at the end of the chapter. LECTURE NOTES I. Introduction A. What do baby formula, citric acid and catfish have in common? Each has been the object of antitrust suits in recent years. B. What do electricity, water service, natural gas, local phone calls have in common? They are all “public utilities” that have been subject to government industrial regulation: government regulation of prices within the selected industries. C. What do workplace safety standards, air bags, affirmative action, access for the disabled, and auto fuel economy have in common? All are objects of social regulation: the regulation of how goods are produced, their physical characteristics, and their impact on society. . D. What do government subsidies to promote fuel efficient automobiles, flat glass, monitor screens, and to enhance U.S. exports all have in common. They are components of industrial policy: government policies to promote selected industries and technologies. 401
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Antitrust Policy and Regulation E. Antitrust policy, industrial regulation, social regulation, and industrial policy are government interventions that relate to the structure, conduct and performance of industry. F. This chapter examines the purposes and effects of their interventions, but first defines and clarifies the debate over industrial concentration. II.
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