10.08.08 - ECONOMICS 1 Professor Kenneth Train 10/8/08...

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ECONOMICS 1 Professor Kenneth Train 10/8/08 Lecture 12 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. ANNOUNCEMENTS We don’t know what the average score is yet for the midterm; if you have any comments on it, you can email me. LECTURE ANTITRUST LAWS Today’s lecture is one of my favorites. There’s lots of story-telling. Okay, there are some overreaching concepts in microeconomics. The focus of the first part of our course are that competition is beneficial, and that monopolies are harmful, but sometimes you have to have regulated monopolies. In some situations you need to have competition to limit monopoly power. This is what we will look at today in antitrust laws. These laws were passed a long time ago but they’re still used today and are quite active. Antitrust Laws - Sherman Act (1890) - Clayton Act (1914) Let’s talk first about the Sherman Act. SHERMAN ACT - “Every person who shall monopolize…shall be deemed guilty.” - Mere size is not an offense - Acts whose purpose is to gain or maintain monopoly are illegal Its first clause says that everyone who monopolizes, and later “shall attempt to monopolize”, shall be deemed guilty of a misdemeanor, and later, “of a felony.” This is the first time the verb “monopolize” was used. The first thing that was established was that merely having a monopoly—having a large market share—was not against the law. This was a surprise to economists, but not lawyers. In law, only an act can be illegal, not a status. Simply being big does not make it a violation of the law. Illegal Acts So the question is, what are those acts? The basic summary is: any act whose intent or purpose is to gain or maintain a monopoly. This is also an essential part of jurisprudence. In all jurisprudence, the act is not the only violation of legality but the intent has to be there. For example, murder and manslaughter differ in intent. This is why it’s hard to look at monopoly; you have to consider intent. Now I’ve got these three cases down in the notes, and then I want to talk about two cases that arose recently. CASES - Standard Oil - Eastman Kodak - Alcoa Standard Oil Standard Oil was organized 1870 by the Rockefeller brothers. They had factories to create lubricating oil and petroleum products. From its
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ECONOMICS 1 ASUC Lecture Notes Online: Approved by the UC Board of Regents 10/8/08 D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course.
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10.08.08 - ECONOMICS 1 Professor Kenneth Train 10/8/08...

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