The United States has a variety of regulations to address the economic harm resu

Question

The United States has a variety of regulations to address the economic harm resulting from monopoly power in an industry. This includes the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These acts were aimed at restricting the formation of cartels and monopolies to protect consumers and ensure competition. The article The Oligopoly Problem argued that oligopolies fall through the cracks of these regulations and leave consumers unprotected from harmful business practices where industries are highly concentrated. Read the article and respond to the following in your initial post:

Explanation / Answer

The firms that abuse their power in an oligopolistic market are : T-mobile, Verizone, AT&T, Sprint, Microsoft.

There are serious problems in the market among consumers posed by highly concentrated industries. These are oligopolies. When three or four firms pursue identical practices, we say that the market is “competitive” and everything is fine. To state the obvious, when companies act in parallel, the consumer is in the same position as if he were dealing with just one big firm. There is, in short, a major blind spot in the nation’s oversight of private power, one that affects both consumers and competition. This blind spot is of particular significance during an age when oligopolies, not monopolies, rule.

Consumers, easily misled by product labelling, often don’t even notice that products like sunglasses, pet food, or numerous others come from just a few giants. For example, while drugstores seem to offer unlimited choices in toothpaste, just two firms, Procter & Gamble and Colgate-Palmolive, control more than eighty per cent of the market.

In back mid-centuries and late 1970s, The Justice Department and Federal Trade Commission, respectively went after oligopolistic cartels to fully investigate their functioning and affects on markets and consumers. These investigations faced many bad reactions. As part of a general retreat from prosecution of all but the most extreme antitrust violations, the United States has nearly abandoned scrutiny of oligopoly behavior, leaving consumers undefended. That’s a problem, because oligopolies do an awful lot that’s troubling .

The article talks about parallel exclusion-that is, efforts by an entire industry to keep out would-be newcomers, a pervasive problem. For example, Over the eighties and nineties, despite “deregulation,” the established airlines like American and United managed to keep their upstart competitors out of important business routes by collectively controlling the “slots” at New York, Chicago, and Washington airports. Visa and MasterCard spent the nineties trying to stop American Express from getting into the credit-card industry, by creating parallel policies (“exclusionary rules”) and blacklisting any bank that might dare deal with AmEx.

So, we can see that oligopoly or concentrated indutries, abuse their powers and practice harmful business tactics to control the markets for their own profit and exploit consumers. They barr the entry of any new firm, restricting scope of new firms to grow ends. They capture the whole market for a particular product and sell it on their own terms and conditions, not considering any need of consumers. They hinder growth of any economy as only a few industries are existing and all concentrated and follow particular regulation.

So, the consumers are also bound to have products as per the oligopolistic regulations. The consumers have to accomodate on quality, qusntity, availability, prices, supply, etc.

As per the author, when members of a concentrated industry act in parallel, their conduct should be treated like that of a hypothetical monopoly. Any abusive or anticompetitive conduct shouldn’t get a free pass just because there are more than one companies involved.  

Basis the article and the highlighted adverse affects of oligopoly, it should be considered that in a global economy of advanced world, consumers has full right to get the best of their choice. Government should have an open eye, strict rules and regulations to keep a check on all possible market exploitations to save the right of consumers and growth of economy.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.