Question 1

Why have new types of antitrust remedies recently developed?

Accepted Answer

New types of antitrust remedies have recently developed because the nature of businesses has changed. Two reasons why are first: The value of platform companies to consumers rises with the market share of the business so breaking them up would decrease the benefit of the service to consumers. Second, technology changes quickly and antitrust remedies involving breaking up a company moves slowly so remedies have to be found that work faster..
Problems and Applications

Question 2

What are the three main U.S. antitrust laws and the main provisions of each?

Accepted Answer

The three main U.S. antitrust laws are the Sherman Act, the Clayton Act, and the Federal Trade Commission Act. The Sherman Act has two sections. Section one outlaws restraints of trade. Section two outlaws attempts to monopolize. The Clayton Act made four specific monopolistic practices illegal. They are: price discrimination, tie-in contracts, interlocking directorships, and purchase of a competitor's stock. The Federal Trade Commission Act created the Federal Trade Commission and made it illegal for firms to use "unfair methods of competition" and to engage in "unfair or deceptive acts or practices."

Question 3

What are the differences between the ALCOA case and the Standard Oil and American Tobacco cases in terms of the Court's approach to antitrust law?

Accepted Answer

In the Standard Oil case, the Court relied on conduct and performance to find the companies in violation of the law, after finding that their structure placed them in possible jeopardy. In ALCOA, once structure was decided, so was the case-since ALCOA had achieved a structural monopoly, it was in violation of the law.

Question 4

What is antitrust policy? What does "trust" mean in this context?

Accepted Answer

Antitrust policy is the government's pol

Question 5

Explain the difference between the judgment by performance and the judgment by structure methods of assessing competition.

Accepted Answer

Judgment by performance means we should

Question 6

How does the contestable market model of oligopoly compare to the cartel model?

Accepted Answer

The cartel model depends on the ability

Question 7

Why is competition in platform monopolies ususally connected to technological change?

Accepted Answer

Platform monopolies tend to be natural m

Question 8

Predatory pricing is a pricing strategy by which firms keep their prices low to prevent potential entry by competition. Is it true that all firms that are found pricing their products low are in violation of antitrust policy?

Accepted Answer

The answer depends on whether the court

Question 9

(a) For each of the following calculate the four-firm concentration ratio and the Herfindahl index.
Industry 1: 44 firms in the industry. The four largest firms each have a 15% market share, the remaining firms each have a 1% market share.
Industry 2: 7 firms in the industry. The six largest firms each have a 15% market share, the remaining firm has a 10% market share.
(b) Is it possible to state with certainty which industry is more competitive? Explain your answer by using your calculations from (a) in your explanation.

Accepted Answer

(a) Industry 1: Four-firm concentration

Question 10

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

Accepted Answer

In this model, firms believe that if the

Question 11

Why, in recent years, have many potential mergers never even proposed? Give three reasons why the government has been lenient in interpreting anti-trust laws.

Accepted Answer

A century-worth of experience has taught

Question 12

What is the difference between the judgment by performance and the judgment by structure methods of assessing competition? What are the problems associated with applying each standard?

Accepted Answer

Judgment by performance means we should

Question 13

How, if at all, does the kinked demand curve model contribute to the theory of oligopoly pricing decisions?

Accepted Answer

The model does not tell us anything abou

Question 14

What standard of judgment was used to decide, and what was the outcome of the following cases:
(1) Standard Oil (1911)
(2) ALCOA (1945)

Accepted Answer

(1) The Standard Oil case was assessed u

Question 15

How has increased international competition changed antitrust policy in the United States?

Accepted Answer

Increased international competition has

Question 16

Suppose your professor has announced to the class that she grades on a curve. The top scorer and those who score at least 95% of his or her score get an A, the next lower five percent (90 - 95% of his or her score) get a B, the next lower five percent (85 - 90% of his score) get a C, and so on. While studying in the library, you see a number of people from the class gathered together, and wander over to see what they are talking about. One of the students is proposing to the others that a cartel be formed. "It will be really easy to make sure we all get A's," he says to the others. "All we need to do is agree on a percentage score low enough that anyone can get it, and all get around the same score ... and then she'll have to give us all As! I propose we all try to get a score of 50 percent."
Offer several reasons why the professor need not be overly concerned that such a plot will ever be successful and ruin the integrity of her grading system. Briefly explain what this example has to do with oligopoly theory.

Accepted Answer

1. From the narrative, it does not appea

Question 17

If the four-firm concentration ratio is 80, what is the highest Herfindahl index that industry could have? What is the lowest?

Accepted Answer

The highest Herfindahl index would occur

Question 18

In Industry 1, Firm A, B, C, D and E each has 20 percent of the market. In Industry 2, Firm A has 75 percent of the market, Firm B has 2 percent, Firm C has 2 percent, and Firm D and 20 other firms all have 1 percent each. Which of these two industries do you consider likely to be more competitive, and why?

Accepted Answer

Industry 1 is likely more competitive. I

Question 19

What was the outcome in the following cases and were they decided by the standard of structure or performance? The cases are: (a) The Standard Oil case (b) The ALCOA case (c) The U.S. Steel case.

Accepted Answer

(a) Standard Oil was found guilty of vio

Question 20

Over time both the judgment by performance and judgment by structure standards have been used in deciding antitrust cases in the U.S. Briefly trace the history of the application of these standards, including references to key cases as appropriate.

Accepted Answer

The judgment by performance was the firs

Why have new types of antitrust remedies recently developed?

What are the three main U.S. antitrust laws and the main provisions of each?

What are the differences between the ALCOA case and the Standard Oil and American Tobacco cases in terms of the Court's approach to antitrust law?

What is antitrust policy? What does "trust" mean in this context?

Explain the difference between the judgment by performance and the judgment by structure methods of assessing competition.

How does the contestable market model of oligopoly compare to the cartel model?

Why is competition in platform monopolies ususally connected to technological change?

Predatory pricing is a pricing strategy by which firms keep their prices low to prevent potential entry by competition. Is it true that all firms that are found pricing their products low are in violation of antitrust policy?

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

Why, in recent years, have many potential mergers never even proposed? Give three reasons why the government has been lenient in interpreting anti-trust laws.

What is the difference between the judgment by performance and the judgment by structure methods of assessing competition? What are the problems associated with applying each standard?

How, if at all, does the kinked demand curve model contribute to the theory of oligopoly pricing decisions?

What standard of judgment was used to decide, and what was the outcome of the following cases: (1) Standard Oil (1911) (2) ALCOA (1945)

How has increased international competition changed antitrust policy in the United States?

If the four-firm concentration ratio is 80, what is the highest Herfindahl index that industry could have? What is the lowest?

What was the outcome in the following cases and were they decided by the standard of structure or performance? The cases are: (a) The Standard Oil case (b) The ALCOA case (c) The U.S. Steel case.

Over time both the judgment by performance and judgment by structure standards have been used in deciding antitrust cases in the U.S. Briefly trace the history of the application of these standards, including references to key cases as appropriate.

Economics and Economic Reasoning

The Production Possibility Model, Trade and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

International Trade Policy, Comparative Advantage, and Outsourcing

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Exam 15: Monopolistic Competition and Oligopoly

Why have new types of antitrust remedies recently developed?

What are the three main U.S. antitrust laws and the main provisions of each?

What are the differences between the ALCOA case and the Standard Oil and American Tobacco cases in terms of the Court's approach to antitrust law?

What is antitrust policy? What does "trust" mean in this context?

Explain the difference between the judgment by performance and the judgment by structure methods of assessing competition.

How does the contestable market model of oligopoly compare to the cartel model?

Why is competition in platform monopolies ususally connected to technological change?

Predatory pricing is a pricing strategy by which firms keep their prices low to prevent potential entry by competition. Is it true that all firms that are found pricing their products low are in violation of antitrust policy?

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

Why, in recent years, have many potential mergers never even proposed? Give three reasons why the government has been lenient in interpreting anti-trust laws.

What is the difference between the judgment by performance and the judgment by structure methods of assessing competition? What are the problems associated with applying each standard?

How, if at all, does the kinked demand curve model contribute to the theory of oligopoly pricing decisions?

What standard of judgment was used to decide, and what was the outcome of the following cases: (1) Standard Oil (1911) (2) ALCOA (1945)

How has increased international competition changed antitrust policy in the United States?

If the four-firm concentration ratio is 80, what is the highest Herfindahl index that industry could have? What is the lowest?

What was the outcome in the following cases and were they decided by the standard of structure or performance? The cases are: (a) The Standard Oil case (b) The ALCOA case (c) The U.S. Steel case.

Over time both the judgment by performance and judgment by structure standards have been used in deciding antitrust cases in the U.S. Briefly trace the history of the application of these standards, including references to key cases as appropriate.

Economics and Economic Reasoning

The Production Possibility Model, Trade and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

International Trade Policy, Comparative Advantage, and Outsourcing

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters