Abstract
The competitive nature of firms and their environment is important in establishing whether a market is a monopoly, a perfectly competitive, oligopoly or monopolistic competition. The antitrust laws are composed of four Acts of legislations that contribute towards the law. Antitrust laws focus on ensuring fair, transparent and competitive trade activities in all industries or markets. Industrial and social regulations are usually conducted by legally established bodies. The regulation is done according the kind of market structure. This is because different market structures have different characteristics. Therefore, the regulation must be tailored to suit the specific market problems. The regulatory bodies have specific functions, which are implemented to achieve specific purposes. There are also federal regulatory commissions tasked with governing social regulations. The objective of these commissions is to ensure social welfare is upheld.
Question A
The Antitrust laws are made up four major legislations. These legislations are the Sherman Antitrust act, the Clayton Act, the Federal trade commission act and the Robinson Patman act. Each of these acts contains important legal information that is used today in antitrust law. The antitrust laws prohibit unlawful business practices and mergers. The court is tasked with determining which cases are illegal. The Sherman Act was the brainchild of Senator John Sherman of Ohio in 1890. The law was introduced to increase fair competition in trade activities. The Sherman act prohibits contracts, conspiracies or combinations that would restrain trade activities. The act also prohibits any form of monopolization. For example, two major companies in the energy industry cannot merge with the aim of forming a cartel to exploit consumers. The act has severe penalties if one is found to guilty, they could be subjected to criminal prosecution. Criminal penalties could be up to $100 million for corporations and $1 million for individuals and up to 10 years in prison.
The Federal Trade Commission Act curbs unfair competition practices and deceptive acts in trade activities. The violations in the Sherman act also apply in the FTC act. All acts that harm fair competition but are not included under the Sherman Act are categorized under the FTC act. The FTC at times enforces the Sherman act. Cases under this act are taken to the Supreme Court by only the Federal Trade Commission.
The Clayton act deals with specific practices under the Sherman act that are not clearly stipulated. These practices include interlocking directories and mergers. For example, section 7 of this act prohibits mergers or acquisitions whose effect lessens competition or leads to a monopoly. The fourth component of the antitrust law is the Robson-Patman act. It is an improvement of the Clayton act. It bans discriminatory services and prices. Therefore, antitrust laws were designed to improve fair competition, transparency and efficiency in trade activities.
Question B
- Oligopoly
The purpose of economic regulations in an oligopoly market is to increase efficiency in the market. An oligopoly market, there are always several firms but one big firm is the price leader or quantity leader. The other firms set their prices or quantity produced based on the one set by the major firm. Therefore, regulations in this market are meant to ensure that the price setter does not set prices too low so that small firms in the market are unable to produce competitively. Furthermore, oligopolies are characterised by cartels where firms collude to exploit consumers by setting prices higher than the market prices. Regulations prohibit collusion, mergers or even acquisitions that may lead to a monopoly.
- Monopoly
In a monopoly, only one firm produces goods or services. The firm sets its prices and decides what quantity to produce. Regulations in this market are meant to protect consumers from the monopoly’s price setting. The monopoly could decide to produce less output and set high prices. Regulations help avoid this kind of exploitation where the monopoly is given the maximum price to avoid exploitation.
Question C
The three major federal regulatory commissions in charge of industrial regulations in are tasked with ensuring fair trade, transparency and efficiency in their respective industries. The Federal Communications Commission is in charge of regulating the communications industry. It is responsible for ensuring fair competition, proper broadband transmission, ensuring media and public safety as well as homeland security. Other regulatory commissions in USA include the Federal Trade Commission and the FERC. These commissions operate independently. They formulate the rules and regulations that govern large businesses that affect public interests. They also regulate the conduct of the relevant industries and award licenses of operation to new operators. They can revoke a license if an operator breaks the rules and regulations. The commissions also investigate the businesses to ensure they are operating within the set rules.
Question D
Social regulation are designed to protect the public or consumers from exploitation by businesses. Social regulations are used to govern industries through a set of rules and regulations. Different market structures have different industrial regulations. The markets can be regulated using price changes on commodities. To ensure fairness in some markets, the regulatory bodies have to set a maximum price to protect consumers and other competitors. For example, in a monopoly, price regulations prevent exploitation of consumers. In an oligopoly, it protects consumers from cartels and small firms from the quantity or price leader.
Question E
The 5 regulatory commissions tasked with social regulations have several functions. The prohibit companies from producing goods in ways or with attributes that harm the public such as health, environment or safety. These commissions also ensure that goods and services are produced in a manner that benefits the public. These commissions ensure that the products are safe for consumption by the public. It also ensures that their prices are reasonable and the production process of the products is acceptable. The objective of the regulations is to improve the welfare of the public through production of quality products. These commissions include the Consumer Product safety Commission, the Environmental protection Agency, Federal Communications Commission, Occupational Safety and Health Administration and the Federal trade Commission.
Conclusion
Therefore, the antitrust law is composed of the Sherman, Clayton, FTC and Robson-Patman acts. This act is useful in ensuring free and fair trade in all markets. Industrial regulations in oligopolies and monopolies are usually carried out to protect consumers from exploitation. They are also done to ensure there are no collusions to alienate other firms in an industry. Regulatory commissions in charge of industrial regulation include the Federal Trade Commission, Federal Communications commission and the FERC. These bodies ensure that players in their respective industries abide by the rules and regulations. They can punish, award licenses, set prices and solve disputes within their respective industries.
References
Jacobson, J. M. (2007). Antitrust Law Developments. New York: American Bar Association.
Rittenberg, L. (2008). Principles of Microeconomics. New York: Flat World Knowledge.
