ECON 201 Lecture 5: Public Policy Toward Monopolies
Document Summary
The government derives this power over private industry from the antitrust laws, a collection of statutes aimed at curbing monopoly power. The first and most important of these laws was the sherman antitrust act, which. Congress passed in 1890 to reduce the market power of the large and powerful trusts that were viewed as dominating the economy at the time. The clayton antitrust act, passed in 1914, strengthened the government"s powers and authorized private lawsuits. The antitrust laws give the government various ways to promote competition. They allow the government to prevent mergers, such as the merger between at&t and. At times, they allow the government to break up a large company into a group of smaller ones. Finally, the antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive. Antitrust laws have costs as well as benefits. Sometimes companies merge not to reduce competition but to lower costs through more efficient joint production.