Question

5.) Limiting Marketing Power: Regulation and Anti-Trust To protect the public interest from monopolies, government uses anti-trust policy to prevent acquisition of monopoly power. In addition, some industries are regulated by rules that constrain firms' pricing. First, discuss how the government uses anti-trust policy to prevent acquisition of monopoly po Lastly, give an example of each from a recent news article wer. Then, discuss one industry that is regulated by rules that constrain its pricing.

Answer 1

Antitrust rules are statutes developed by the American government to protect customers from predatory corporate practices. They make sure that fair competition prevails in a free market economy. These rules have evolved with the market, alertly guarding against potential monopolies & disruptions to the productive flow of competition.

These rules are applied to a broad range of questionable corporate activities, including but not restricted to market allocation, price fixing, bid rigging and monopolies.

If these rules did not exist, customers wouldn’t benefit from various alternatives or competition in the marketplace. Further, customers would be compelled to pay greater prices and would have access to a restricted supply of commodities.

A recent case involved Microsoft company, which was found guilty of anti-competitive acts by compelling its own web browsers upon computer systems which had installed the WOS.

Price fixing happens if the price of a commodity is set by a business deliberately rather than allowing market forces to establish it naturally. Many firms may come together in order to fix prices to ensure profit margins.

For instance, In 2013 the Department of Justice found Apple guilty of fixing the prices for e-books. Apple was held liable to pay 450 million dollars in damages.