Summarize the four major pieces of legislation collectively known as the Antitrust Laws
Antitrust laws are regulation set by the different government which seeks to set a competitive business environment. There is four legislation governing Antitrust Laws in the world. These include the Sherman Act of the 1890s, the Federal Trade Commission Act, the Clayton Act of 1914 and the Robinson-Patman Act.
The Sherman Act of the 1980s was the first legislation in the United States that guided the subsequent antitrust legislation in the United States. The main purpose of the Sherman Act of the 1980s was to protect the consumers against exploitation by the Companies. The act prohibited cartels by firms whose role was to impose high prices against the consumers.
The Clayton Act defines the behavior by firms that interferes with free trade. As a result, the Act identifies four acts by Companies that violate the provisions of the Antitrust Law. These acts include a merger, price discrimination, restraining other companies from engaging in a free trade and assigning market or consumers to firms inconsistent to competitive market forces.
Just as the Clayton Act, which provides specific restriction of the Sherman act, the Federal Trade Commission Act reinforces the provisions of the Sherman Act. The Act established the Federal Commission whose sole mandate was to provide policing against unfair competition in the market.
The Robinson-Patman Act was structured in 1936 as a remedy to the depression. This act amended section 2 of the Clayton Act to allow promotional allowances to a chain store. The Act specifically aimed at addressing the issue of price discrimination in the economy.
Discuss the intended purpose of industrial (i.e., economic) regulation as it applies to the following market structures:
Oligopoly is a market structure dominated by a few firms dealing in a particular product line. Firms operating in this market structure have a tendency of formulating cartels to give them exclusive power of setting their market prices. Their acts may expose consumers to exploitation because of high prices charged for their product or services.
No doubt, the industrial regulation is essthe ential in protecting the consumers against exploitation resulting from high prices charged. Therefore, economic regulation Acts enable the country to achieve balanced development by creating enabling business environment. For example, industrial regulation dictates the prices that oil firms should offer in an effort to reduce prodthe uction cost given the importance of oil in energy production.
Monopoly market structure is dominated by one firm. The goverthe nment may decide to set a monopoly to take advantage of economies of scale. Also, economic regulation sets a monopoly to provide essential public goods.
Consequently, industrial regulation in the context of a monopoly market structure servthe es to not only deter monopolies from independently determining the prices of essential commodities, but also to put in place measures aimed at discouraging a market scenario where a monopoly has absolute control over a product, hence killing competition.
Many electricity distributing companies in third-world countries, for example, act as monopolies in their own right; however, respective goverthe nments provide regulations to prevent them from exploiting customers by setting power prices as they so desire, and also from having absolute control over a commodity (power) that is considered essential for economic growth.
Explain the major functions of the three primary federal and state regulatory commissions that govern industrial regulation
There are many federal regulatory commissions in the United States. Some of the regulatory commissions in primary industries include Interstate Commerce Commission, Federal Energy Regulatory Commission, and Federal Trade Commission.
The United States Economy depends significantly on trade. As a result, the USA government has enacted several regulatory commissions to create enabling the business environment. Interstate Commerce Commission is one of the industrial regulatory commissions that enforce legislation to improve the efficiency of interstate transportation. The commission seeks to normalize any transportation barriers set by States to impede free competition.
The Federal Energy Regulatory Commission (FERC) has a mandate to regulate the electricity sales in the United States.
The commission determines the wholesale electricity rates, set prices for natural gas, and prices of oil. The commission mainly aims to provide low prices for energy in the bid to spur industrialization since energy sector is controlled by few firms (monopolies and Oligopoly), and thus high chances of forming cartels to discriminating consumers.
Another primary regulatory body is the Federal Trade Commission (FTC). FTC ensures free and fair competition in the industries. Also, the commission protects the consumer from exploitation by ensuring that monopolies do not subject consumers to high prices.
Discuss the intended purpose of social regulation as it applies to all market structures
Social regulations are State laws that address social concerns or problems of consumers. Social regulations seek to protect consumer welfare by addressing fundamental issues affecting society.
Social regulations as applied to all market structures are facilitated by the government as well as government agencies, with the intention of compelling companies to comply with issues concerning the environment, labor conditions (e.g., occupational health and safety), consumer protection from exploitative tendencies, and labor issues (e.g., non-discriminative labor practices, equal opportunity employment etc).
Under social regulations, for example, factories are not supposed to discharge harmful waste into the environment, and failure to comply with such regulation is often met with stiff penalties and legal action. Similarly, food-processing companies are required under social regulations to include information about the raw materials used and the expiry date on the labels of the packaged products.