Task 3 Antitrust laws were set up by the federal government as a way to try to keep business in fair competition with each other. They were preventing businesses from forming monopolies, oligopoly, and illegal mergers. The laws were attempting to prevent businesses from trying to fix prices, which in turn would help the production of quality goods and better services. Healthy and fair competition between businesses would make sure that consumer demands are met not only by the manufactures but also with the sale of the goods being at reasonable prices. It began with the Sherman Antitrust Act of 1890.
However, within this broad framework, many details need to be worked out, and the costs and benefits to businesses will depend on how the government tackles these finer points (Horne, 2011). At the core of a cap and trade system is the pollution permit (often called an allowance), which is essentially a commodity created by governments in recognition that the atmosphere cannot be treated as a free dumping ground. Businesses regulated by cap and trade are required to own one tonne’s worth of pollution permits for every tonne of pollution they produce (Horne, 2011). If pollution permits are costly, businesses will choose to reduce their pollution so they need fewer permits. Like a carbon tax, this approach strengthens the economic case for investing in clean energy (Horne,
They make their own prices, which would in most cases be more of a benefit to the producer. Both structures make it very difficult for others to enter the industry, limiting and sometimes blocking entry and competition. Industrial Regulation seeks to prevent unfair practices of restricting market entry, opening markets up for competition. Ideally, prices with regulate themselves in a fair competition, preventing one or a few companies from setting the prices that would be deemed as inappropriate. It also works to prevent the practices of unfair pricing and charging higher prices to consumers while the companies produce less product, limiting choices for consumers.
INDUSTRIAL REGULATION Industrial regulation focuses on control of businesses so that they produce economic outcomes that benefit society. These regulations were first started in the United States after the Civil War, where an expansion of business created monopolies and affected how consumers could purchase product. Governmental control was initiated through creation of regulations such as the Sherman Act of 1890, the Clayton Act of 1914. Regulation of industry affects the market by ensuring monopoly pricing doesn’t exist, which could negatively affect consumers and society. Monopolies harm the market by not allowing cost reductions as scene in a natural monopoly by avoiding high prices and restrictions in output of an unregulated monopoly.
“The most important provision of this act however is the prevention of anticompetitive mergers. This occurs when a company buys a competing firm. While most mergers allow the companies to create better quality goods at less expensive prices, some mergers limit competition and make price fixing easier. This part of the act was designed to prevent mergers from creating monopolies” (Ellsworth, 4). This section of the Clayton act wanted to promote free trade and keep smaller businesses from getting too greedy.
Assuring competition is critical to maintaining low prices, high quality, and business efficiency. Blair and Lopatke (2008 explained that by eliminating the competition, dominant sellers can increase monopoly profits and deadweight of social welfare losses can occur (p. 442, 439). But not all monopoly companies causes harm, some companies like the water utility, natural monopoly, and is regulated by the government (McConnell, 2012, pp.
Running head: REGULATIONS AND MARKET STRUCTURES Relationship between Regulation and Market Structures Rajenna Combess Western Governors University EGT1: Economics & Glob Bus Apps Task 3 03/19/2012 A. Define industrial (i.e., economic) regulation Industrial regulation is the government regulation of an entire industry with the objective of keeping close eye on the industry prices and products to ensure that it does not create a monopoly and take advantage of consumers. Economic regulation is a form of government regulation designed to influence the behavior of industries and individuals in the private sector (McConnell & Brue, 2008). Why industrial regulation exists Industrial regulation exists to ensure that natural
If the business has debt that is unpaid then the creditors could go after the individual. Same is also said if the owner has debts separate from the business debt the creditors could go after the business. As a sole proprietorship business, liability insurance could be purchased to deter this. • Income Taxes- As a sole proprietorship business, a person can avoid the higher taxes that are associated with corporations. A sole proprietorship business can also deduct business expenses just like any other business.
One of the reasons companies outsource workers, and thus help imperialize foreign countries, is for cheap labor. Western corporations can have multiple sources for a given item, in order to allow continued production once one region realizes it is being treated unfairly and strikes. Oddly, it is argued that these companies could survive without any foreign connection—capitalism without imperialism. But, this would lower profits and prevent “advanced capitalism.” The decision to claim that cultures with what is considered modern technology is defined by military power rather than which culture is actually superior. It is this force that essentially created this gap.
In a monopolistic competitive market profit is important. When a firm first enters a monopolistic market they can act like a monopoly until others join in the market which will lead to competition for lower prices. Kudler Fine Foods will compete with other fine foods for lowest prices on their goods; however, they have to make a profit in order to stay in business. In the short-run Kudler will have more profit, but in the long-run the profit will decrease to other competitors in the