Chapter 5 Government Regulation of Competition and Prices

Question 1

Any agreement to change an agreed upon price or to set max or min prices between or among competitors; per se (in, through, or by themselves) a violation of the Sherman Act

Answer 1

Horizontal Price-Fixing

Question 2

“Every contract, combination in the form of trust or otherwise or conspiracy in restraint of trade or commerce among the several states or with foreign nations is declared to be illegal; any person who shall monopolize or attempt to monopolize or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several states, or with foreign nations shall be deemed guilty of a felony”

Answer 2

Sherman Anti-trust Act

Question 3

The ability to control price and exclude competitors defined by looking at both the geographic and product markets

Answer 3

Market Power

Question 4

“No corporation…shall acquire the whole or any part of the assets of another corp… where in in any line of commerce in any section of the country, the effect of such acquisition may be substantially lessen competition or tend to create a monopoly”; if the act is violated through ownership or control of competing enterprises a court may order the violating defendant to dispose of such interests by issuing a decree called a divestiture order

Answer 4

Clayton Act

Question 5

Prohibited by Clay and Robinson-Patman Acts; occurs when a seller charges different prices to different buyers for “commodities of like grade and quality,” with the result being reduced competition or a tendency to create a monopoly

Answer 5

Price Discrimination

Question 6

Occurs when the seller makes a buyer who wants to purchase one product buy an additional product that he or she does not want; violation of Sherman Act to force “tying” sales on buyers

Answer 6

Tying