Antitrust Laws and the US Market

Paper Summary:

This paper looks at the US debate over antitrust laws. Disagreements over antitrust policy range in scope from a consideration of the effectiveness of a specific policy to whether or not the entire model on which our laws are based is flawed at the core. Here an attempt is not made to give full answers to any of those questions. Instead, some examples are considered to help clarify the debate. Specifically, the competition in our free-market economy is considered, with some examples of specific policies in this area, and an example that illustrates differing opinions of the success or failure of the goals of those policies.

From the Paper:

"The single most frequently used word that one will encounter in researching almost any economic topic is "competition". This word can be defined in the economic sense as "a market situation characterized by a sufficiently large number of buyers and sellers so that no single buyer or seller can influence prices or quantities sold or bought in the market". The model of "pure competition" is, of course, illustrated by the horizontal demand curve of the firm versus the downward sloping demand curve of the industry. The fact that each firm is a price-taker and various other requirements, such as perfect knowledge and homogeneous products, exist in this model."

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