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Chapter 27: Q.7 (page 621)
Do you think that the regulation described in Problem 27-6 is more likely an example of the capture hypothesis or the share-the-gains, share-the-pains theory? Why?
Consumer benefits must be considered by central authority, according to the share-the-gains, share-the-pains theory.
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Local cable television companies are sometimes granted monopoly rights to service a particular territory of a metropolitan area. The companies typically pay special taxes and licensing fees to local municipalities. Why might municipality give monopoly rights to a cable company?
Who pays for the many hours of work that numerous officials of agencies such as the Consumer Product Safety Commission devote to establishing new regulations?
Consider the data from Problem . Suppose that antitrust authorities have determined that there are separate relevant markets for e-books and physical books. In addition, these authorities perceive that a monopoly situation exists that can be challenged on legal grounds if the value of the Herfindahl-Hirschman Index exceeds . On the basis of this criterion, do the antitrust authorities conclude that there are grounds for a legal challenge in either market? Explain.
Research into genetically modified crops has led to significant productivity gains for countries such as the United States that employ these techniques. Countries such as the European Union's member nations, however, have imposed controls on the import of these products, citing concern for public health. Is the European Union's regulation of genetically modified crops social regulation or economic regulation?
An years past, firms around the world have secretly engaged in collusive agreements to restrain production and push prices above competitive levels.
Evidence compiled by government officials investigating such agreements has revealed that conspiring firms often utilize similar methods of establishing and enforcing collusive restraints of trade. Most agreements, for instance, assign to each firm an allowed market share, a permitted region of operations, or an approved set of customers. In addition, participating firms commonly are required to exchange sales information so that they can monitor adherence to their agreements to restrain trade. In this chapter, you will learn why firms that typically utilize these techniques to formulate and maintain collusive agreements engage in secret conspiracies: Such agreements are illegal under U.S. antitrust laws.
Understand the foundations of antitrust regulations and enforcement
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