by doing nothing at all 15 5a Increasing Competition with Antitrust Laws

By doing nothing at all 15 5a increasing competition

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by doing nothing at all 15-5a  Increasing Competition with Antitrust Laws - antitrust laws -  a collection of statutes aimed at curbing monopoly power - Sherman Antitrust Act - 1890 to reduce the market power of the large and powerful  “trusts’  that were viewed as dominating the economy at the time - these laws allow the government to prevent merges and to break up companies - sometimes companies merge not to reduce competition but to lower costs through more effi- cient joint production - the benefits are sometimes called  synergies 15-5b  Regulation - regulators can subsidize the monopolist and pick up the losses inherent in marginal-cost pric- ing - this requires taxation - regulators can allow the monopolist to charge a price higher than the marginal cost  3
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Tuesday, June 16, y - if a regulated monopolist knows that regulators will reduce prices whenever costs fall, the mo- nopolist will not benefit from lower costs 15-5c  Public Ownership - the government can run the monopoly itself - government bureaucracy becomes a special-interest group and attempt to block cost-reduc- ing reforms which is less reliable than the profit motive of private firms 15-5d  Doing Nothing - a competitive enterprise economy will pro- duce the largest possible income form a given  stock of resources…in my view how- ever, the de- gree of “market failure” for the American economy is  much smaller than the “political” failure arising from  the imperfections of economic policies found in real  political systems” George Stigler (Novel Prize for his  work in industrial organization) 15-6  Conclusion: The Prevalence of Monopolies - monopoly power is a matter of degree 4
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