Question

5)How does government regulate oligopolies?
6) Are some monopolies allowed by the government? What type?
7) How does the size and scope of business affect competition? Explain
8) What was the Sherman antitrust act?

Answer 1

Government regulates Oligopolistic markets by monitoring its pricing behaviour and keeping check on market share in terms of revenues and customer and keeps strong vigilance if an act of monopoly is foreseen. Various committess and frameworks are established to avoid risks.

Monopolistic markets are only allowed if the cost of establishment is high and time for rollout is sufficient high when in need of emergency. If firms tend to benefit the needs of masses even with monopoly it gets go ahead. Generally monopolistic competitive firms are allowed.

Size and scope affects competitors to large extent as players can achieve eceonomies of scale, grab market share and posses first mover advantages and can maintain higher capital expenditure compared to smaller firms.

Sherman Act condemns any firm from forming cartel or colluding or enacting price rigging and intend to thrpttle market or limit industrial outputs or share markets are all considered as felony. Such violations are punishable by fines and penalties and due course of action is taken on case to case basis.