Question

Explain what is meant by Market power as defined in the US Anti-trust Law in Sherman law 1 and 2? 9b. At what level does the US Government consider a firm for review for Anti-trust. 9c. Give three reasons why monopolies may exist and explain them briefly. 9d. Summarize the current Google anti-trust case.

Answer 1

US Anti-trust Law in Sherman Law 1 and 2 was passed in 1890. It was mainly started to regulate the competition existing among many firms in the active market. This act was mainly formed to restrict the situation of increasing level of prices which paves the independent power of monopoly. Such monopoly power influences the critical factor which restricts the customer to buy the products with the prices fixing by the monopolist power in the market. Such forces are determined by the Market power. Regulating the economic transanctions of goods and services among all firms without unaffordable price is known as Market power which aligned with Shwerman Law 1 and 2.

US Government considers the situation of firm in a such level that determines the level of merger analysis. The merger analysis refers to creating the health competitive environment which enhances the business spirit among the firms in order to maintain the quality and quantity of goods and services.

Reasons of monopolies:- 1) Firms which produce unique products especially electronic products. For example, Samsung companies produce unique featured electronic goods. So the fixing the high prices with covers the cost of production is the first reason of emerging monopoly power 2) Extracting oil resources from one unique extraction company leads to monopoly power. 3) Firms which produce the products with marginal price amidst overcoming cost of production also leads to monopoly power.

Recently European Union fined 5.1 Billion to Google firms for violating anti-trust laws which was fully framed by the US Government laws. The factor like occupying the production techniques of producing android phones by capturing the share in the European markets. 80% of market was shared by the Google firms in the european market.