week3 - IV. MONOPOLIES A. History 1. Sherman Anti-Trust Act...

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1 IV. MONOPOLIES A. History 1. Sherman Anti-Trust Act passed in 1890: very general, outlawed “…every contract, combination, or conspiracy in restraint of trade.” a. Violations are crimes b. open-ended, giving power to judges. 2. 1890-1914: Early period: a. Law largely scorned., as it is deemed either harmless, or an impediment to efficiency. b. Courts began shaping law in vague terms; e.g., distinguish among types of restraint of trade. c. Filed suit against industrial giants in early 1900 s , including Standard Oil in 1910, with following results: 1) Standard Oil’s 90% of refinery output was considered proof of it being a monopoly. 2) “Rule of reason” established. 3) Classify some behavior as exclusionary. 4) Broke company into 34 parts. d. Clayton Act passed in response, which reduced judicial discretion and created FTC. 3. 1915-1936: Rule of Reason. a. Courts relied on reasonableness tests, and often treated suspect behavior leniently.
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2 b. Executive branch discouraged aggressive prosecution; Great Depression created doubts about free-market economy. 4. 1936-1972: Focus on market structures a. FDR listening to competitive market advocates, as planning models not doing well. b. Appointees start ambitious attacks on collusion/single firm dominance to revive Sherman. 5. 1972-1991: Chicago School. a. Chicago School of economics attacked “activism”; emphasized efficiency arguments for industrial concentration. b. School of thought gained influence with Nixon appointees. c.
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This note was uploaded on 06/30/2009 for the course ECON 103 taught by Professor Sandrablack during the Fall '07 term at UCLA.

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week3 - IV. MONOPOLIES A. History 1. Sherman Anti-Trust Act...

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