Download Market Structures Regulation and Deregulation Ch. 7

Objectives:
1. Understand how firms use market power.
2. List three market practices that the government regulates or bans to protect competition.
3. Define deregulation, and list its effects on several industries.
-----------------------------------------------------------------------------------------------------------------------------*Monopoly and Oligopoly can sometimes be bad for the ______________ and the __________ as a
whole.
*Markets dominated by a ____________________ tend to have _______________ and lower output than
markets with many sellers.
>_____________________ – selling a product below cost to drive competitors out of the market.
*Economists are skeptical about claims of predatory pricing because the predator losses money
each time it drives an endless series of __________________________________.
>The federal government has a number of policies that keep ____________________________
the price and supply of important goods.
>If a firm controls a large share of a market, the FTC (________________________________)
and the __________________________________’s Antitrust Division will watch that firm
closely to ensure that it does not unfairly force out its competitors.
>_____________________ – are laws that encourage competition in the market place.
>1890 – _________________ – outlawed mergers and monopolies that limit trade between states.
>Fed. Gov’t. has the power to regulate industries, to stop firms from forming cartels or
____________________________.
>1997 – _____________ who owns an operating system that tells a computer how to run –
Department of Justice accused Microsoft of using a monopoly in operating systems to
____________ extend its control over the market for a program known as a browser that allows
people to use the _______________________.
>Microsoft insisted that computer manufacturers that sold its operating system also included the
___________________.
>Microsoft was accused of _________________________ – because the company gave away its
browser for free, which would ruin the other browser company, Netscape.
>Microsoft’s power in one market gave it a big – and __________________ – advantage in
related markets.
>The Government sued Microsoft so that other companies would have ____________________
in the market.
>A Federal judge ruled that Microsoft was a _______________ and began taking steps to
________ the company.
Breaking Up Monopolies:
>The Government has used antitrust legislation to break up such companies as…
 ______________________________ {1911}
 John D. Rockefeller’s Standard Oil {________}
 _____________________ & Telegraph into 7 regional phone companies.
Blocking Mergers:
>The Federal Government has the __________________________ the rise of monopolies.
>A merger occurs when a _____________________ with another ___________________ or
companies to form a single firm.
>The Government tries to ____________________ of a merger on price and service when it
decides whether or not to ______________________________.
>While some mergers hurt the consumers by reducing competition, other can actually leave the
_____________________________.
>Corporate mergers will ___________________________________________ and lead to lower
prices, more reliable products or service, and a more efficient industry.
>In 1997, the Justice Department and the FTC have put together ________________________
for proposed mergers.
>Late 1970s and early 1980s – Congress passed laws to ______________ several industries.
_______________________– the removal of some government controls over a market.
>The government no longer decides what role each company can play in a market and how much
it can ________________________________.
>Industries that have been deregulated…
-_________________ {1978 by President Carter}
-Trucking
- __________________
-Railroad
-__________________________
-Television Broadcasting
>While deregulation weakens ____________________________, antitrust laws strengthen it.
>The government uses both tools as a way to _________________________.
>In many cases of deregulation, many new firms have entered the deregulated industries right
away.
>Competition _______________________ in the airline, trucking, and banking industries.
>Typically, this period of ________________ was followed by the widespread disappearance of
some firms in ____________________________.
>This weeding out of _____________________ is considered healthy for the economy.
>Freed from regulatory restrictions, many of the _____________________________ competed
aggressively for the busiest routes.
>For most travelers, the increased competition created ___________________.
>The end result has been that many busy airports now have one ______________________, and
in some ______________________________ higher than before deregulation.
>In the early 2000s, Congress gave a $ 5 billion bail-out to the _______________________. This
was due to higher ______________ for the airlines, sharply rising labor costs, and loss of
______________.
>September 11th, even hurt the industry _______________________.
>Some airline companies may be gone in the next 5-10 years and others will make it because of
the $ 10 billion in _______________________________________________ that the government
is using to help the airline industry.
REVIEW: Write a 15 sentence summary over today’s lesson. If you omit this part, your grade will be a
50.