Sherman Act 1890: Modernization and Impact on Markets

2021 ◽  
Vol 9 (3) ◽  
pp. 104-108
Author(s):  
Alex Han
Keyword(s):  
Chicago School ◽  
Perfect Competition ◽  
Barriers To Entry ◽  
Free Entry ◽  
Major Purpose ◽  
Free Competition ◽  
Sherman Act ◽  
Antitrust Laws ◽  
American Economy ◽  
Harvard School

The major purpose of the Sherman Act was to prevent mergers from forming monopolies. It ensures consumers are protected from price discrimination, and there is free competition. Several economists, classical economists, neoclassical economists, Chicago school and Harvard school, pointed out several antitrust laws. Classical economists led by Smith argued that monopolists set prices at higher prices and raise their charges higher through understocking the markets hence corporations and mergers should be prevented. Neoclassical economists developed a model which assumes that there are no barriers to entry whereby there is free entry to the market. Harvard school also advocated for free competition. Either, the Chicago school was against the idea of free competition and proposed some acts from the antitrust laws to be removed.  However, with advancements in technology, the Sherman Act has become outdated and some languages used are held, making it a challenge to interpret in courts. There is a need for the antitrust laws to be reformed to fit the changing technology. Bills should be proposed to make improvements to the acts. For example, Klobuchar Amy, in April 2021, proposed a bill seeking to reform antitrust laws to better perfect competition in the American economy.

Consumers’ Misevaluation and Public Promotion

2016 ◽  
Vol 16 (4) ◽  
Author(s):  
Atsushi Yamagishi
Keyword(s):  
Welfare Loss ◽  
Barriers To Entry ◽  
Free Entry ◽  
Opposite Result ◽  
True Value ◽  
Oligopolistic Market ◽  
Public Econ ◽  
The Government

Abstract: I analyze markets in which consumers may misestimate the true value of goods and the government can affect the valuation through public promotion. When entry of firms is not allowed, the government makes consumers overvalue the goods to mitigate welfare loss from underproduction in an oligopolistic market, provided that the promotion cost is sufficiently low. On the contrary, in a free-entry market, no matter how low the promotion cost is, the government may make consumers undervalue them in order not to induce wasteful entries despite the remaining underproduction problem. In addition, my result in a free-entry market suggests that the main finding of Glaeser and Ujhelyi (J Public Econ 94: 247-257, 2010)crucially depends on the barriers to entry and the opposite result may be obtained under free entry.

scholarly journals The Influence of Economic Theories and Schools on Competition Law in terms of Vertical Agreements

2018 ◽  
Vol 11 (18) ◽  
pp. 153-180
Author(s):  
Zbigniew Jurczyk
Keyword(s):  
Competition Policy ◽  
Evaluation Criteria ◽  
Competition Law ◽  
Chicago School ◽  
Antitrust Law ◽  
Competitive Effects ◽  
Economic Theories ◽  
The Past ◽  
Antitrust Analysis ◽  
Harvard School

The paper aims at showing the influence and the views espoused by economic theories and schools of economics on competition policy embedded in antitrust law and conducted by competition authorities in the field of vertical agreements. The scope of the paper demonstrates how substantially the economization of antitrust law has changed the assessment as to the harmfulness of vertical agreements. The analysis of economic aspects of vertical agreements in antitrust analysis allows one to reveal their pro-competitive effects and benefits, with the consumer being their beneficiary. The basic instrument of the said economization is that antitrust bodies draw on specific economic models and theories that can be employed in their practice. Within the scope of the paper, the author synthesizes the role and influence of those models and schools of economics on the application of competition law in the context of vertical agreements. In presenting, one after another, the theories and schools of economics which used to, or are still dealing with competition policy the author emphasises that in its nature this impact was more or less direct. Some of them remain at the level of general principals and axiology of competition policy, while others, in contrast, delineate concrete evaluation criteria and show how the application of those criteria changes the picture of anti-competitive practices; in other words, why vertical agreements, which in the past used to be considered to restrain competition, are no longer perceived as such. The paper presents the models and recommendations of neoclassical economics, the Harvard School, the Chicago and Post-Chicago School, the ordoliberal school, the Austrian and neoAustrian school as well as the transaction cost theory.

Inter-market Variability of Smallholder Beef Cattle Farming in East Java Indonesia

2021 ◽  
Vol 7 (2) ◽  
pp. 176-190
Author(s):  
Andrie Kisroh Sunyigono ◽  
Isdiana Suprapti ◽  
Nurul Arifiyanti
Keyword(s):  
Beef Cattle ◽  
Concentration Ratio ◽  
Perfect Competition ◽  
Commodity Chain ◽  
Barriers To Entry ◽  
Gini Coefficients ◽  
Market Structures ◽  
Output Market ◽  
High Investment ◽  
Analytical Tools

Indonesia has failed to achieve meat self-sufficiency; meanwhile, East Java is among the centers of beef cattle with a relatively high contribution in terms of GDP and employment. Therefore, this study aims to identify and analyze the market structure of the beef cattle commodity chain by considering the concentration ratio, Gini Index, as well as barriers to exit and entry. The study was conducted in Malang Regency and Sapudi Island, with 164 respondents, which consisted of calf suppliers, farmers, traders, and slaughterhouses. Furthermore, the analytical tools used include descriptive, concentration ratio, Gini Coefficient, and analysis of barriers to entry and exit. Based on the results, the market structures in the beef cattle commodity chain in terms of its input market was perfect competition, while the intermediate and output market was oligopoly. These results were confirmed by the concentration ratios of calf suppliers and farmers, which were lower than the ratios of traders and slaughterhouses. Although the market structures were different, their Gini Coefficients are almost similar because a value of 0.2 showed an equitable distribution. Additionally, the barriers to entry into the market were high investment with a large number of import and market problems. Meanwhile, the barriers to exit the market were a large number of potential demands, high investment, and a source of income.

SMALL BUSINESS AS A BASIS FOR LOGISTIC BARTER

2020 ◽  
Vol 10 (10) ◽  
pp. 2293-2300
Author(s):  
L.V. Gabdullin ◽  
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Perfect Competition ◽  
Competitive Environment ◽  
Federal Law ◽  
Antitrust Laws ◽  
Monetary Relations ◽  
Business Conditions ◽  
Main Thing ◽  
The Impact

The article analyzes the development of small business using the example of that one in Naberezhnye Chelny. A competitive market is influenced by many factors. These are laws, state policy in the field of small business in the construction sector, as exemplified in this article, a competitive environment. The article presents the impact of Federal Law No. 135 “On Protection of Competition” on the competitive environment, including in construction. In our country,a lot is said about supporting small businesses, there are federal and regional programs. There is also an understanding of what kind of small business it is and what it is for. There are many definitions of small business. Each country has certain criteria for evaluating small businesses. The main thing is that the goal of small business is to increase jobs, and not just to employ people, but to increase the country’s human resources. It should be borne in mind that small businesses respond more quickly to local business conditions. The novelty of the research is that an important point of small business is the creation of a market close to perfect competition, and this is the basis of the concept of logistics barter, which will dominate the economy. The new concept of logistic barter involves the denial of monetary relations between manufacturers in the B2B segment. The B2C segment is not interesting for logistic barter. The money will remain in “households” who care about the market with ideally perfect competition. A market of perfect competition and antitrust laws will work in tandem. Banks will be relevant only for end consumers, namely “households”.

The Goals of Competition Law

2020 ◽  
pp. 58-89
Author(s):  
Rex Ahdar
Keyword(s):  
New Zealand ◽  
Competition Law ◽  
Chicago School ◽  
Labour Government ◽  
Business Interests ◽  
Michael Porter ◽  
Workable Competition ◽  
Term Benefit ◽  
Harvard School

The Commerce Act 1986 expressly states its object is to promote “effective or workable competition.” This traditional Harvard School approach has been consistently assailed by big business interests in New Zealand, assisted by a phalanx of “down-under” Chicago School economists and lawyers. Chicagoans have had minor successes in terms of amendments to the principal Act, and some quite notable court victories, but the glittering prize, the overall objective of the Act, has remained unchanged. Chicago won several battles, but lost the war. A major amendment to the Act in 2001, promoted by a Labour government, recast its object to state that its purpose was “to promote competition in markets for the long-term benefit of consumers within New Zealand.” After a quiet period where nothing seemed to have changed, the most recent signs are that a mild preference for consumers is appearing. The chapter also examines the international competitiveness arguments of Michael Porter.

Antitrust and Regulation in American Economic History

2018 ◽  
pp. 324-348
Author(s):  
Brooks Kaiser
Keyword(s):  
Economic History ◽  
Government Regulation ◽  
Occupational Safety ◽  
Market Failures ◽  
Legislative Action ◽  
Human Interactions ◽  
Quality Regulation ◽  
Ex Post ◽  
Antitrust Laws ◽  
American Economy

Over the course of American history and economic development, market activity and the systems underlying and governing this activity have coevolved to address the changing fundamentals of human interactions within the marketplace and beyond. The growth of the American economy and its regulation are deeply intertwined. This chapter discusses these coevolutionary forces in the context of the development of American antitrust laws and the expanding reach of government regulation throughout American economic history. Antitrust and regulation are addressed together because they complement each other in their ability to address ex-ante incentives, primarily through regulation, and ex-post corrections and adjustments, primarily through antitrust suits and related legislative action, that may in turn result in new regulation. The chapter focuses on government regulation of industry in two arenas: price and entry regulation with market power (antitrust issues), and regulation of other market failures, especially environmental, health, occupational safety, and product quality regulation.

Mr. Justice White and the Rule of Reason

1951 ◽  
Vol 13 (2) ◽  
pp. 229-243 ◽  
Author(s):  
Robert B. Dishman
Keyword(s):  
The United States ◽  
Department Of Justice ◽  
Basic Assumptions ◽  
Rule Of Reason ◽  
Sherman Act ◽  
The Supreme Court ◽  
Antitrust Laws ◽  
The Common ◽  
Obiter Dictum ◽  
Restraint Of Trade

The “rule of reason” remains after almost forty years the most curious obiter dictum ever indulged in by the Supreme Court of the United States. Mistaken though it was in its basic assumptions, the rule nevertheless persists as the Court's standard for construing the Sherman Act. This is not to say, as some critics have said, that the rule has seriously hampered the Department of Justice in enforcing the antitrust laws. We have it on the authority of Thurman Arnold that without the rule die Sherman Act would be “unworkable … because every combination between two men in business is in some measure a restraint of trade.” The rule, he has said, “has the effect of preventing the antitrust laws from destroying the efficiency of diose combinations that are actually serving, instead of exploiting, the consumer.” The fact remains, however, that in adopting the rule the Court erred in at least two respects: first, in applying a test of reasonableness where in the early cases at least none was called for and, second, in basing that rule on a misunderstanding of the common law. For the first of its sins the Court has been scolded many times; for the second, it has received surprisingly litde criticism.

scholarly journals Protecting Competition in the American Economy: Merger Control, Tech Titans, Labor Markets

2019 ◽  
Vol 33 (3) ◽  
pp. 69-93 ◽  
Author(s):  
Carl Shapiro
Keyword(s):  
Labor Markets ◽  
The United States ◽  
Merger Control ◽  
Antitrust Enforcement ◽  
The Past ◽  
Sherman Act ◽  
The Supreme Court ◽  
Dominant Firms ◽  
Monopsony Power ◽  
American Economy

Accumulating evidence points to the need for more vigorous antitrust enforcement in the United States in three areas. First, stricter merger control is warranted in an economy where large, highly efficient and profitable “superstar” firms account for an increasing share of economic activity. Evidence from merger retrospectives further supports the conclusion that stricter merger control is needed. Second, greater vigilance is needed to prevent dominant firms, including the tech titans, from engaging in exclusionary conduct. The systematic shrinking of the scope of the Sherman Act by the Supreme Court over the past 40 years may make this difficult. Third, greater antitrust scrutiny should be given to the monopsony power of employers in labor markets.

A Giant Problem: The Influence of the Chicago School on Australian Competition Law, Economic Dynamism and Inequality

2019 ◽  
Vol 47 (4) ◽  
pp. 696-714 ◽  
Author(s):  
Adam Triggs ◽  
Andrew Leigh
Keyword(s):  
United States ◽  
Market Power ◽  
Competition Law ◽  
Chicago School ◽  
The United States ◽  
Market Concentration ◽  
Vertical Restraints ◽  
Barriers To Entry ◽  
Competitive Process ◽  
Growing Body

Australia has a competition problem: there is not enough of it. Our industries are concentrated. Our markets show signs of weak competition. The way Australia’s courts, parliamentarians and regulators think about competition is partly to blame. Although it has been less influential in Australia than in the United States, the Chicago School’s views on competition have shaped our laws, policies and enforcement practices. The Chicago School views market concentration as a virtue more than a vice. The School contended that barriers to entry are negligible, market power is temporary, most mergers are good, vertical restraints and predatory pricing are either benign or efficient. The growing body of research and experience, however, shows that the Chicago School’s faith in the ability of markets to self-correct and deliver competitive outcomes was misplaced. There is a strong progressive case for repositioning how we think about competition. Focusing more on the competitive process, the structure of markets and the incentives those structures create for firms will play an important role in reducing inequality.

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