ECON 2005 Lecture Notes - Lecture 13: Federal Trade Commission, Natural Monopoly, Price Discrimination
Document Summary
Social regulation - ensure health and safety. Antitrust policy - regulation to punish firms that engage in anti- competitive behavior. Federal regulatory group that investigates firms that engage in interstate commerce to determine unfair behavior. Similar to ftc, but can press criminal charges. Economic regulation - regulate natural monopolies heavily. Might be forced to operate at p=mc. However, the natural monopoly"s average costs will always be falling. Lrmc < lrac, bringing the average down. Therefore, the firm will be operating where p < atc. Requires a subsidy from gov"t to stay in business. Making a customer buy something from someone else in order to be allowed to buy from you. Not allowing customers to buy from a competitor. When 2 competing firms share a board member. If a firm is engaging in anti-competitive behavior, a case can be brought against them by an antitrust organization, a firm, or an individual.
