A monopoly is a business that owns the whole market for a specific good or service. Therefore, there is no competition and the firm is able to sell their goods or services at a price which suits them. Monopolies are generally discouraged as since there is no competition and they are able to charge what they want for their goods or services, this is of course bad for the consumer.
Collusion occurs when businesses talk to each other in order to determine a …show more content…
Common illegal practises of antitrust include price fixing and acts undertaken by a company to either achieve or maintain monopoly power.
There are three separate ways in which antitrust is enforced. These are through the federal trade commission, the department of justice and through law suits from private parties.
Antitrust laws are predominantly put in place to discourage monopolies and encourage competition. However, due to the control that the government have over this, it can be argued that rather than prohibiting, they actually encourage monopolies, thereby limiting competition.
Pricing in particular, tends to be the biggest problem area when looking at antitrust actions. According to antitrust laws, following what Ronald Coarse said, the following three scenarios would all be deemed as breaking these laws:
1. If a company was to charge a high price in comparison to their competition and still manages to attract consumers, then it is said to have a monopoly per se. An example of this could be the drug companies as people pay for a brand they know and …show more content…
For the second case, the company is just likely to be competing which is what antitrust laws are there to encourage, however, a company in this scenario is likely to be charged with predatory pricing as by doing this temporarily, they are driving out competition which then enables them to raise the price higher than it initially was once the majority, if not all the competition has left the market – however, of course once this happens then the market is free again for competition to enter, although at this point, they may find it difficult due to the customer base and consumer trust already in place with the current