Question

Monopoly power runs counter to the public interest because it leads to high prices, resource misallocation, and inefficiency. Antitrust policy is one of the government's instruments for curbing monopoly power and protecting competition.

Suppose that the presidents of two auto manufacturing companies exchange text messages in which they discuss jointly raising prices on their new lines of hybrid SUVs.

This illegal communication would violate which of the following laws?

a. The Sherman Antitrust Act of 1890

b. The Clayton Act of 1914

c. The Celler–Kefauver Act of 1950

d. The Robinson–Patman Act of 1936

Answer 1

Antitrust policy is one of the government's instruments for curbing monopoly power and protecting competition.Antitrust laws or competition laws refer to a government instituted policy meant to control or dismantle monopolies. The purpose of competition laws is to enhance free competition in the market. The illegal communication that would violate the Sherman Antitrust Act of 1890. Hence,option(A) is correct.