Econ CH 14-17

Econ CH 14-17 - Chapter 14 Regulation and Antitrust Law...

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Chapter 14 – Regulation and Antitrust Law Market Failure – a state in which the market does not allocate resources efficiently. Political Equilibrium – a situation in which all their choices are compatible and in which no group can improve its position by making a different choice. Regulation – consist of rules administered by a government agency to influence economic activity by determining prices, product standards and types, and the conditions under which new firms may enter an industry. Antitrust Law – is law that regulates and prohibits certain kinds of market behavior, such as monopoly and monopolistic practices. Social Interest Theory – of regulation is that politicians supply the regulation that achieves an efficient allocation of resources. Capture Theory – of regulation is that regulation is in the self-interest of producers. Marginal Cost Pricing Rule – sets price equal to marginal cost. It maximizes total surplus in the regulated industry. Average cost Pricing Rule – sets price equal to average cost.
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This note was uploaded on 05/18/2008 for the course ECON 103 taught by Professor Holt during the Spring '08 term at George Mason.

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Econ CH 14-17 - Chapter 14 Regulation and Antitrust Law...

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