Download Government Regulation and Federal Regulatory Agencies

Government Regulation
and
Federal Regulatory Agencies
Kain G. , Gabriel K. , and Matthew Y.
Key Terms
Trusts- A combination of firms designed to restrict
competition or control prices in a particular
market.
Price Discrimination- The practice of selling the
same product to different consumers at different
prices if it substantially lessens competition.
Cease and Desist Order- An FTC ruling requiring
a company to stop an unfair business practice,
such as price fixing, that reduces or limits
competition.
Notes
Government is allowed to skip in when markets crash, or there needs to be protection
from serious injury or death to the public.
U.S. Consumer Product Safety Commission (CPSC) oversees the safety of more than
15,000 types of products.
The CPSC is allowed to make a company order a recall of products that need repair or
replacement
Government’s maintain competitive markets by probability market structures that are
not competitive or regulatory markets where full competition is not possible
Notes
Anti Monopoly Legislation : Sherman AntiTrust Act, Clayton AntiTrust Act, Federal
Trade Commission Act and the Robinson - Patman Act
Government is allowed to break up monopolies and trusts, preventing market failures
due to inadequate competition
Not all monopolies are bad
It makes sense to let a firm expand to take advantage of lower production costs and
then regulate its activities so that it can not take advantage of the consumer
More Notes
Local and State governments regulate monopolies such as cable tv, water, and power
If a company wants to raise rates, they must argue a case to the government
Federal Regulatory Agencies
Food and Drug Administration, FDA: Enforces laws to ensure purity, effectiveness,
and truthful labeling of food, drugs, and cosmetics; inspects production and shipment
of these products. (1906)
Federal Aviation Administration, FAA: Oversees the airline industry. (1958)
Equal Employment Opportunity Commision, EEOC: Investigates and rules on charges
of discrimination by employers and labor unions. (1964)
Nuclear Regulatory Commission, NRC: Regulates civilian use of nuclear materials and
facilities. (1974)
Anti-Monopoly Legislation
Sherman Antitrust Act 1890- Outlawed all contracts “in restraint of trade” to halt the
growth of trusts and monopolies.
Clayton Antitrust Act 1914- Strengthened the Sherman Act by outlawing price
discrimination.
Federal Trade Commission Act 1914- Established the Federal Trade Commission to
regulate unfair methods of competition in interstate commerce.
Robinson-Patman Act 1936- Forbade rebates and discounts on the sale of goods to
large buyers unless the rebates and discounts were available to all.
Activity:
Prompt -- What are austerity measures? What do they do? What issues do they cause,
and why don’t people like them?