Module 10: Monopoly and Antitrust Policy
Section outline
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This chapter discusses public policy issues about competition. How can economists and governments determine when mergers of large companies like AT&T and Bell-South should be allowed and when they should be blocked? The government also plays a role in policing anti-competitive behavior other than mergers, like prohibiting certain kinds of contracts that might restrict competition. In the case of natural monopoly, however, trying to preserve competition probably will not work very well, and so government will often resort to regulation of price and/or quantity of output. In recent decades, there has been a global trend toward less government intervention in the price and output decisions of businesses.
Upon completion of this module, you will be able to:
- Explain antitrust law and its significance
- Calculate concentration ratios
- Calculate the Herfindahl-Hirschman Index (HHI)
- Evaluate methods of antitrust regulation
- Analyze restrictive practices
- Explain tying sales, bundling, and predatory pricing
- Evaluate a real-world situation of possible anti-competitive and restrictive practices
- Evaluate the appropriate competition policy for a natural monopoly
- Interpret a graph of regulatory choices
- Contrast cost-plus and price cap regulation
- Evaluate the effectiveness of price regulation and antitrust policy
- Explain regulatory capture and its significance.
To achieve these objectives: [Edit these items to match your resources and activities.]
- Read the Module 10 Introduction.
- Read Chapter 10 in the course textbook, Microeconomics.
- Complete the Module 10 Discussion Forum.
- Complete the Module 10 Assignment.
- Complete the Module 10 Quiz.
- For course instructors, Textbook Title, Article Title, etc.
[Include all reading assignments here that are outside of Moodle. Be as
concise as possible. More information can be included in the
third-party section below, if necessary.]
- Complete the [specific activities in the module. Include all in the order you want them completed.]
Module Pressbooks Resources and Activities
You will find the following resources and activities in this module at the Pressbooks website. Click on the links below to access or complete each item.
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Students mustMark as done
Chapter 10 of Introduction to Microeconomics
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Students mustMark as done
Module 10 In Class Activity (hide from students)
Course SLO 1: Identify the basic economic principles that serve as the foundation of economic analysis
Course SLO 3: Analyze the economic impact of government regulation, price setting, and taxes on consumers and producers
Course SLO 7: Analyze the performance of firms under different market structuresModule SLO: 10.2.1 – Analyze restrictive practices
Module SLO: 10.2.3 – Evaluate a real-world situation of possible anti-competitive and restrictive practices
Section 2 of the textbook introduces restrictive practices and lists a few types of these practices. For this discussion, your task is to:
1. Identify a good and firm that utilizes a restrictive practice
2. Explain how the restrictive practice works
3. Explain who benefits and who is harmed by this restrictive practice
4. In your opinion, is this a fair restrictive practice, or is it one that may be predatory?
Instructor Notes:
In part 4, you may expect to see mixed responses from students, where they may say certain situations are fair, while others are not. In feedback, you may prompt the student to consider how their evaluation was influenced by their personal experiences. Would their opinion change if this restrictive practice was applied to another good or firm?
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