9. Antitrust laws Cooperation among oligopolies runs counter to the public inter

Question

9. Antitrust laws Cooperation among oligopolies runs counter to the public interest because it leads to underproduction and high prices. In an effort to bring resource allocation closer to the social optimum, public officials attempt to force oligopolies to compete instead of cooperating. Consider the following scenario Suppose that two American investment banks negotiate a merger agreement because a financial crisis threatens to bankrupt both firms. This merger could potentially be stopped by a lawsuit brought by which of the following American institutions? O The Justice Department O The Defense Department O The Commerce Department O The Interior Department

Explanation / Answer

Ans)

The Justice Department

The department of justice sets new guidelines and seeks to stop mergers which may lead to too much concentration of market power.

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