ECO 201 Lecture Notes - Lecture 18: Clayton Antitrust Act, Economic Surplus, Resale Price Maintenance
Document Summary
Department of justice formed merger guidelines in 1980s. +if post merger hhi was less than 1000 then the industry was competitive. +if 1000 was less than hhi was less than 1800 then the merger is scrutinized. +if hhi is greater than 1800 then the merger is likely to be challenged. Difficulties in using concentration measures as indicators of competition for mergers. Likelihood of collusion and department of justice anti-trust policy. When hhi is in a questionable area, other factors are considered. +political process generates regulations designed to achieve socially efficient outcome. +regulations designed to satisfy the demand of producers to maximize producer surplus. +benefit producers (concentrated group) at expense of consumers (dispersed group) Increased capacity from 10 to 90% of market. 1882, independent members contributed shares to a central trust. Allowed a central body to control all firms. Prohibited combination trust, or conspiracy to restrict interstate or global trade. Created federal trade commission to prosecute unfair competition .
