Gov Regulation of Business

Question 1

Sherman Act of 1890

Anti-Trust

Answer 1

One of the first national laws designed to regulate competition. Meant to prevent extreme concentrations of economic power.

Question 2

Chicago School

Answer 2

Argued that the market should decide the most efficient size for each industry. “Has competition been harmed?”

Question 3

Post Chicago School

Answer 3

Competition alone may not be enough to protect consumers.

Question 4

Clayton Act of 1914

Answer 4

Purpose was to clarify the earlier Sherman Act

Question 5

Robinson-Patman Act of 1936

Answer 5

An amendment to the Clayton Act.

Question 6

Per se violation

Answer 6

Automatic. Defendants cannot defend themselves by saying “The impact was so bad..” or “no one was hurt”. Criminal and civil penalties

Question 7

Rule of Reason Violation

Answer 7

Are illegal only if they have an anticompetitive impact. Traditionally not criminal penalties

Question 8

Cooperative Strategies

Answer 8

Allow companies to work together to their mutual advantage

Question 9

Coop - Horizontal Agreements

Answer 9

Among competitors. Agreement between Levi Strauss and Wrangler

Question 10

Coop - Vertical Agreements

Answer 10

Among participants at different stages of the production process. Agreement between Levi Strauss and Macy’s

Question 11

Coop - Mergers and Joint Ventures

Answer 11

Among competitors. Go beyond simple agreements to combine forces more permanently

Question 12

Market Division

Answer 12

Any effort by a group of competitors to divide its market is a Per se violation of the Sherman Act. Stanford agreed to accept only students from west of Mississippi and the east to Yale

Question 13

Bidrigging

Answer 13

Per se violation. Competitors eliminate price competition by agreeing on who will submit the lowest bid.

Question 14

Price Fixing

Answer 14

Prices should be set by markets, not by competitors or judges.