A. To regulate corporations, the government passed the Antitrust Laws to protect the public and companies. These laws were the Sherman Act of 1890, the Clayton Act of 1814, the Federal Trade Commission Act of 1914, and the Celler-Kefauver Act of 1950. The Sherman Act was created to outlaw monopolization and also prohibited anticompetitive stock trading. After experiencing that the Sherman Act had inconsistencies in its wording that reduced its effectiveness, the Clayton Act was passed which strengthened the Sherman Act in that it prohibited firms from merging with other firms if it reduced competition, it prohibited price discrimination which leveled the playing field for purchasing companies and encouraged competition, it prohibited exclusive dealings and tying contracts which could also reduce competition, and finally it prohibited any person from holding more than one Director position with any competing company. The Federal Trade Commission Act was passed to create a governmental organization that regulated trading practices and was given authority to issue cease and desist orders to any corporation found in violation. Because the Clayton Act did not specify whether a firm could acquire physical assets of competing firms in order to sabotage or manipulate them, the The Celler-Kefauver Act was passed and it closed that loophole. Also, it regulated vertical and conglomerate mergers which were deemed anticompetitive.
B. The purpose of industrial regulation on market structures is to protect consumers. Also, regulation exists to encourage competition in order to achieve more stable market conditions for consumers and producers. When it comes to market structures, the most regulated are oligopolies and monopolies.
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...ese types of organizations have tremendous control over the market. The purpose of industrial regulation on Monopolies and Oligopolies is to provide a fair price to consumers
C. The three primary federal and state regulatory commissions that govern industrial regulation are the following:
First, the Federal Energy Regulatory Commission is a government agency that regulates the economic, infrastructure, and transmission of electricity, natural gas, and oil across states. It also regulates natural gas and hydropower projects. Second, the Federal Communications Commission regulates interstate and international communications by radio, television, wire, satellite and cable in the U.S. Lastly, the State Public Utility Commissions regulate the rates and services of utilities that provide essential services such as energy, telecommunications, water, and transportation.
United States has several laws that ensure that competition among businesses flow rely and new competitors get free access to the market. These laws intend to ensure fair and balanced competitive business practices. However, there are times when some businesses will do anything to gain competitive edge. USA has strong antitrust laws that prohibit fixing market price, price discrimination, conspiring boycott, monopolizing, and adopting unfair business practices. The history of Antitrust laws goes back to 1890 when Congress passed Sherman Act. In 1914, Congress passed two more acts: Federal Trade Commission Act, and Clayton Act. With some revisions, these three acts are still core antitrust acts.
Regulations are created to protect the health and welfare of the public. The LCR was created to protect people from lead exposure from drinking water. While the USEPA creates the original regulation, states are tasked with establishing individual plans of action to help municipalities protect public health and welfare and be in compliance with mandated regulations.
The anti-trust laws were set in place to promote vigorous competition but also to protect the consumer from unfair mergers and business practices. The first antitrust law that was passed by Congress is called the Sherman Act and is a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” according to www.FTC.gov . Later in 1914 Congress passed two more laws, one creating the Federal Trade Commission Act (FTCA) and then the Clayton Act, which now create the three core federal antitrust laws that are still active currently. Although they have changed over the last hundred years, they still have the same concept: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up” as stated by the FTC.gov website on The Antitrust Laws.
The Clayton Anti-Trust Act of 1914 has 26 sections describing laws which “protects trade and commerce against unlawful restraints and monopolies” (63rd Cong.,Sess. II, 1914). The Federal Trade Commission and the U.S. Department of Justice (DOJ) Antitrust Division are bodies that enforce the federal antitrust laws which are deeply rooted in the Sherman Anti-Trust Act of 1890 and the Clayton Anti-Trust Act of 1914.
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
The bureaucracy consists primarily of the executive branch of government, and its components. These include cabinet departments, independent agencies, regulatory commissions, and government corporations. Through the constitution, Congress is tasked with the responsibility of organizing and funding the bureaucracy. This gives Congress the inherent rights, among others, to enact statutes to establish or abolish executive agencies or departments, call for reorganization of
Governments regulate businesses when market failure seems to arise and occur and to control natural monopolies, control negative externalities, and to achieve social goals among other reasons. Setting government regulations on natural monopolies is important because if not regulated, then these natural monopolies could restrict output and raise prices for consumers. It is important to regulate natural monopolies because they don’t have any competition to drive down the price of the product they are selling. Therefore, with no competition, they can control the output and the price of the product at whatever they deem necessary. With regulations the government keeps it fair both for the consumer and producer. It’s also important for government
Without precise definitions, US Courts were unable to effectively “give precise legal meaning to the law” (Sherman go.galegroup.com). This meant that the court could rule in favor of large corporations that infringed on antitrust laws, such as in United States v. E. C. Knight Company. Additionally, failure to mention labor unions had a particularly devastating effect. Employers continuously used the Sherman Antitrust to take down the efforts of labor unions and to suppress workers who attempted to take a stand against corporations. Most court cases ruled in favor of the employers, further halting union activities. By the beginning of the 20th century, the Sherman Antitrust had failed in every aspect of its original
In the early 1930s Congress passed two major statues, which are the hub of federal securities regulation in the United States today. These two statues, the Securities Act of 1933 and the Securities Exchange Act of 1934 have three basic purposes
The Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914 are two things that work together to help explain and prohibit things that people believe are wrong in the world and definitely hurts peoples and the governments wallets.
While the Sherman Act provided protection against monopolies, Congress determined that it wasn’t quite comprehensive in its’ self. It was supplemented in 1914 by the Clayton Antitrust Act, which prohibited exclusive sales contracts, inter-corporate stockholdings, and unfair price-cutting to freeze out competitors. The Clayton Act of
needs of business. The big business and business leaders influenced the regulation and the government worked for
The ability for the federal government to regulate businesses’ activity is given in the Constitution. Article 1, Section 8 is known as the commerce clause; it states, “Congress shall have the Power…to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” (Reed, 173). Through the commerce clause, the government is able to regulate business activity by the use of administrative agencies, which is defined as “a governmental regulatory body that controls and supervises a particular activity or area of public interest and administers and enforces a particular body of law related to that activity or interest” (Administrative Agency, 1). There are two types of regulatory authority that agencies may possess; quasi-legislative and/or quasi-judicial. Quasi-legislative means that agencies can make rules and regulations that have the same impact as a law created by federal legislation. Quasi-judicial authority gives agencies the power to make rulings, just like in federal courts.
Well the bottom line is that a monopoly is firm that sells almost all the goods or services in a select market. Therefore, without regulations, a company would be able to manipulate the price of their products, because of a lack of competition (Principle of Microeconomics, 2016). Furthermore, if a single company controls the entire market, then there are numerous barriers to entry that discourage competition from entering into it. To truly understand the hold a monopoly firm has on the market; compare the demand curves between a Perfect Competitor and Monopolist firm in Figure
A monopoly is the control or possession in the supply or trade of a commodity or service. Monopolists tend to keep prices high and restrict outputs showing little or no responsiveness to the needs of their customers. Because of this, most governments tend to control monopolies to keep them in check. However, most governments tend to create monopolies for national security, for competing economically internationally, or where most producers would be wasteful or pointless. While monopolies exist in varying degrees, no firm has total monopoly in this era of globalization.