Economics Dictionary of ArgumentsHome
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| Antitrust laws: They prohibit practices like price fixing, market division, and abuse of dominant position. These laws aim to protect consumers, ensure fair pricing, and encourage innovation by maintaining a competitive economic environment. See also Market concentration, Monopolies, Oligopolies, Monopolistic competition, Cartels, Competition._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Policy of the United States on Antitrust Laws - Dictionary of Arguments
Henderson I 64 Antitrust Laws/Policy of the US/Henderson/Globerman: In the United States, the two main pieces of antitrust legislation are the Sherman Act and the Robinson-Patman Act. The Federal Trade Commission (FTC) and the US Department of Justice (DOJ) enforce federal antitrust laws. State attorneys-general may also bring federal antitrust suits on behalf of individuals residing within their states or on behalf of the state as a purchaser. Private suitors can also bring antitrust suits. Indeed, law and economics scholar Fred McChesney points out that for every antitrust suit brought by government, private plaintiffs bring ten (McChesney, 2008)(1). For many decades, the "Structure-Conduct-Performance" (SCP) paradigm* dominated antitrust theory and practice. The SCP paradigm basically maintained that if a relatively small number of firms has a large market share, those firms will refrain from competing with each other, particularly with respect to reducing their prices. As a consequence, consumers will pay higher prices and producers will earn higher profits than would be the case if a larger number of firms each had a relatively smaller market share. The structure of a market in the SCP paradigm was identified by its concentration ratio. The latter is basically a measure ofthe share of a product or geographic market that is accounted for by the largest firms in that market. Thus, the 4- and 8-firm concentration ratios are the percentage of total revenues earned by all firms producing a specific product or selling their product in a specific location that is accounted for by the 4 and 8 largest firms, respectively.** >Market concentration. General rules of thumb were used to identify when concentration ratios were "too high." If they were too high, went the argument, antitrust authorities should prevent additional mergers or acquisitions and should monitor specific business practices that might be anti-competitive.*** >Mergers. Henderson I 65 The empirical justification for relying on the SCP paradigm was the statistical observation that profitability in various industries was positively correlated With the industries' concentration ratios. This led many economists to conclude, without much other evidence, that firms in relatively concentrated markets were likely charging consumers above-competitive prices and reaping "unjustifiably" high profits as a result. DemsetzVs: (…) Demsetz had a different idea. >Antitrust laws/Demsetz, >Monopolies, >Cartels, >Market concentration/Demsetz. * For an overview of this paradigm, see Bain (1968)(2). ** A more detailed measure of concentration (the Herfindahl Index) takes into account the market shares of all firms in a market. *** A merger occurs when two organizations agree to combine into a single entity. In the case of an acquisition, one organization buys the other organization. 1. McChesney, Fred (2008). Antitrust. In David R. Henderson (ed.), The Concise Encyclopedia of Economics (Liberty Fund). 2. Bain, Joe S. (1968). Industrial Organization. Wiley._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Policy of the United States Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019 |
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