lecture19_312_GovernmentReg3_SP11_overheads

lecture19_312_GovernmentReg3_SP11_overheads - Lecture #19...

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Unformatted text preview: Lecture #19 April 6, 2011 Anti-Trust, Financial Capital and the push for a central bank. National Government Regulation begins with state regulation: Munn vs. Illinois 1877 followed by: Wabash vs. Illinois 1886 Interstate Commerce Act, 1887 Sherman Anti-Trust Act, 1890 The Sherman Act is about size, but not exactly about size. The Act makes conspiracy in restraint of trade illegal. But the act is not very clear about just what constitutes a conspiracy, and what restraint of trade actually is. There was an overall concern about bigness. The Sherman Act made conspiracy in constraint of trade illegal and it made monopolies illegal. It gave the government, as well as private individuals, the ability to prosecute firms for conspiring or for attempting to monopolize. The Federal Trade Commission, FTC was created in 1914, to do more or less the same. Hughes and Cain note in chapter 18, that 1) Americans wanted the advantages of large-scale production that only huge firms could provide. 2) The virtues o the competitive open market where consumer interest is protected by competition among sellers. So there are two possible interpretations of why firms became large: 1) lower costs 2) market power. Lets begin with a competitive industry, with lots of firms, and an aggregate supply curve that is simply the horizontal summation of the individual firms marginal cost curves: The industry demand curve produces a market outcome of Qc output and , Pc Price. Suppose the individual firms in this market all merge, to...
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lecture19_312_GovernmentReg3_SP11_overheads - Lecture #19...

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