After studying this chapter you will be able to understand: Can universities and colleges improve education by engaging in price-fixing? Why doesn’t the water company or electric company compete? Why is market failure an economic rationale for regulation? | Chapter 13 Antitrust and Regulation Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: Why is market failure an economic rationale for regulation? Why doesn’t the water company or electric company compete? Can universities and colleges improve education by engaging in price-fixing? * What is a Trust? A combination or cartel consisting of firms that place their assets in the custody of a board of trustees * What is Predatory Pricing? The practice of one or more firms temporarily reducing prices in order to eliminate competition and then raising prices * When was the age of the Robber Barons? In the later part of the 1800’s * What was done to limit the power of Trusts? Congress passed laws aimed at preventing firms from engaging in anticompetitive activities * What is the Sherman Act? The federal antitrust law enacted in 1890 that prohibits monopolization and conspiracies to restrain trade * What is the Clayton Act? A 1914 amendment that strengthens the Sherman Act by making it illegal for firms to engage in certain anticompetitive business practices * What business practices were declared illegal under the Clayton Act? Price discrimination Exclusive dealing Tying contracts Stock acquisition of competing companies Interlocking directorates * Was the Clayton Act an improvement over the Sherman Act? Although more specific than the Sherman Act, the Clayton Act is also vague * What is the Federal Trade Commission Act? The federal act that in 1914 established the Federal Trade Commission (FTC) to investigate unfair competitive practices of firms * What is the Robinson-Patman Act? A 1936 amendment to the Clayton Act that strengthens the Clayton Act against price discrimination * What is the basic purpose of the Robinson-Patman Act? To prevent large sellers from offering different prices to different buyers where the . | Chapter 13 Antitrust and Regulation Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: Why is market failure an economic rationale for regulation? Why doesn’t the water company or electric company compete? Can universities and colleges improve education by engaging in price-fixing? * What is a Trust? A combination or cartel consisting of firms that place their assets in the custody of a board of trustees * What is Predatory Pricing? The practice of one or more firms temporarily reducing prices in order to eliminate competition and then raising prices * When was the age of the Robber Barons? In the later part of the 1800’s * What was done to limit the power of Trusts? Congress passed laws aimed at preventing firms from engaging in anticompetitive activities * What is the Sherman Act? The federal antitrust law enacted in 1890 that prohibits monopolization
