This chapter could be used in discussing the deregulation of utilities, telephone service and electrical transmission and its impact on businesses and consumers. Instructors who feel pressed for time may wish to include some of the content of this chapter in a unit with the market structures-Chapter 24 monopoly-or with Chapter 5 (the six economic functions of government).Define and identify terms and concepts listed at the end of the chapter.State the major arguments for and against social regulation.Explain two major problems encountered in regulating natural monopolies.Explain why a regulated monopoly does not have an incentive to reduce costs.Identify the options that government might use when a natural monopoly exists.Explain how the Herfindahl index is used as a guideline by the government in deciding whether to permit horizontal mergers.Distinguish between three types of merger.Analyze effectiveness of antitrust laws by noting how they have been applied to existing market structures, mergers, and price fixing.Identify three current economic goals that may conflict with strict enforcement of antitrust laws.Steel, Alcoa, and DuPont cellophane Supreme Court cases. Identify major issues in antitrust enforcement by reviewing decisions in U.S.Outline the major provisions of each of the following: Sherman Act, Clayton Act, Federal Trade Commission Act, and Celler-Kefauver Act.
One of the Web-Based Questions has been changed and the other is new.Īfter completing this chapter, students should be able to: The section of social regulation has been expanded with more emphasis on its costs and benefits. The examples throughout the antitrust discussion have been updated. The chapter has been revised and major sections – "Industrial Concentration: Beneficial or Harmful?" and "Industrial Policy" – have been deleted. The chapter concludes with an analysis of social regulation with an emphasis on the importance of determining its optimal level through cost-benefit analysis. Information on deregulation in the 1970s and 1980s is presented. Natural monopolies and their regulation are discussed and critically evaluatde. Antitrust laws, their major impact, and issues surrounding their enforcement, are presented in the chapter.
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