Antitrust Practices and Market Power

Antitrust Practices and Market Power

Research authoritative articles using the news and the DeVry Online Library ( for a recent case of antitrust investigation. You are free to choose a case from any industry and any part of the world. Based on the case you have selected, answer the following questions.
1. Why was/were the firm(s) investigated for antitrust behavior?
2. Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.
3. Given your research and findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? Be sure to provide real world examples of where this may be the case to strengthen your position.
4. Provide at least one example of a case where having a monopoly or oligopoly may actually benefit the society.
Based on your findings to the questions listed above, write a report with a minimum of 300 words in essay format in APA style (use the APA template in Doc Sharing), using correct economic terms covered in the discussions. If you ONLY write 300 words, you probably won?t be able to fully answer the questions.
Key concepts to include in your paper include the following.
? Monopoly Market Structure
? Oligopoly Market Structure
? Barriers to Entry Into the Market
? Natural Monopoly
? Government Monopoly
? Downward Sloping Demand Curve
? Economies of Scale
? Price Fixing
? Collusion
? Monopoly Pricing
? Price Maker
? Market Power
? Economic Profits
? Imperfect Competition
? Rent-Seeking Behavior
? X-Inefficiency
? Deadweight Loss to Society
? Marginal Cost
? Marginal Revenue
? Antitrust
You must use at minimum at least one article from the DeVry Online Library. Note: Although your textbook is a good source of knowledge, it is NOT an article and cannot be the only source for the assignment. Cite all your references in APA format. You can use the Citations & Bibliography function of Microsoft Word, which is found under the References tab.

1. Write your individual answers to the questions listed above together not each minimum 300 words in essay format in APA style [use APA template in Doc Sharing], using correct economic terms covered in the discussions. If you ONLY write 300 words, you probably won?t be able to fully answer the questions.
2. Some key concepts to include in your paper – Monopoly Market Structure, Characteristics of Pure Monopoly, Barriers to Entry into the market, Natural Monopoly, Government Monopoly, Downward Sloping Demand Curve, Economies of Scale, Monopoly Pricing, Price Maker, Market Power, Economic Profits, Imperfect Competition, Rent Seeking Behavior, X-inefficiency, Deadweight Loss to Society, Marginal Cost, Marginal Revenue, Antitrust, Bundling.
You must use at least one article. Note: The textbook is not an article and cannot be the ONLY source for the assignments. Use the DeVry Library as a resource for finding your references.
? Title page or name on paper
? Introduction paragraph
? Body of paper paragraph(s) with in-text citations provided for sources used
? Conclusion paragraph
? Reference(s)

Price Controls
I do not support gas price controls, or more specifically, price ceilings on gasoline because they do not help the economy in the long run. The laws of supply and demand dictate that the market itself should be the determining factor of prices, which change with the supply and demand of specific goods in the market. A couple factors such as the negative effects on the Law of Supply, and the hidden costs to customers make price ceilings an unpopular choice for most economies.
Within the Law of Supply, certain determinants are affected when price controls are imposed. Although it may not be apparent in the short-run, price ceilings will limit the number of producers entering the market due to the increased difficulty of making a profit because of the prices imposed on their goods. In addition to limiting the number of producers, price ceilings reduce the need to be competitive, which leaves companies little incentive to increase efficiency and innovative initiatives in the way they produce and procure their products to lower the prices themselves.

Price Ceiling on Oil
In the past, such as the price ceiling on oil during the 1970?s in the United States, price controls created disequilibrium between supply and demand which resulted in a shortage of gasoline during that time. This meant that those that were willing and able to purchase gas could not do so. With the intent on keeping prices down, customers often pay hidden costs that are not related to prices (Ellig, 2003). Long waits in line, increased stress through competitive acquisition of the limited goods, and the inability to purchase those goods regardless of financial standing takes its own toll on the economy.

History has already showed us the results of price controls in the market. Although the long-term effects may not be apparent, such as companies shutting down because of its inability to maintain the controlled prices and the unemployment that follow it is real. Artificially changing the laws of supply and demand and the additional non-monetary costs to the customers can lead to a bigger problem than just higher gas prices. The market should be allowed to pursue it?s equilibrium without any interference.


[Type references alphabetically; format APA]
Last Name, First Initial. Middle Initial. (year). Name of article in sentence case: If there is a subtitle, it should also be in sentence case. Name of Journal in Title Case, volume(issue), first page-last page. Retrieved Month Day, Year, from name of database (if applicable) and specific URL.
Ellig, Jerry (2003, January 28). Competition and Effects of Price Control. Retrieved May 2,
2008, from Federal Trade Commision Web site: http://www.ftc.