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:

What are examples of firms in an oligopolistic market that abuse their power?

Explain how they abuse their power and describe the impact on consumers.

Do you agree with the author’s feelings about increased government oversight of such industries? Why or why not? In your response posts to peers, comment on your own experiences with such industries and on their impact on you. Additionally, discuss whether you agree or disagree with your peer’s stance on regulation, explaining why.

Explanation / Answer

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 our nation’s oversight of private power, one that affects both consumers and competition. This can be seen when shopping for wireless carriers Verizon, AT&T and Sprint. 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 ...

Yes I agree with him.

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