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Chapter 11: Q. 12 (page 272)

What is the goal of antitrust policies?

Short Answer

Expert verified

To regulate the markets in an economy, the government employs a variety of antitrust measures.

Step by step solution

01

Definition

Antitrust laws allow the government to prohibit certain types of mergers and to break up giant corporations into smaller parts.

02

Explanation

Goals of Antitrust Policies:

  • To encourage market enterprises to compete in a free and fair manner.
  • To avoid a monopoly that concentrates all market power in the hands of a single manufacturer.
  • To make price discrimination illegal by providing reduced costs to consumers.
  • To protect customers by providing them with more options and higher-quality products.
  • To maximize market allocative efficiency.

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Most popular questions from this chapter

Use Table 11.4 to answer the following questions.

If the transit system were regulated to provide

the most allocatively efficient quantity of output, what output would it supply and what price would it charge? What subsidy would be necessary to ensure this efficient provision of transit services?

Some years ago, two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market in this case was 鈥渢he market for intercity bus service.鈥� Another possible definition was 鈥渢he market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.鈥� Which definition do you think the bus companies preferred, and why?

Can you think of any examples of successful

predatory pricing in the real world?

Use Table 11.5to calculate the four-firm concentration ratio for the U.S. auto market. Does this indicate a concentrated market or not?

Table 11.5Global Auto Manufacturers with Top Four U.S. Market Share, June 2013 (Source: http://www.zacks.com/commentary/27690/autoindustry-stock-outlook-june-2013

Is it true that the four-firm concentration ratio puts more emphasis on one or two very large firms, while the Herfindahl - Hirshman Index puts more emphasis on all the firms in the entire market? Explain briefly.
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