Question

1.Antitrust Policy and Regulation – Antitrust policies such as the Sherman Antitrust Act of 1890 are intended to reduce market power and promote pure competition. How do consumers benefit from such policies? Rationalize your answers.

2. Agriculture: Economics and Policy – Just as soda pop taxes can impact a market, how can agricultural subsidies affect a market? Justify your response.

Answer 1

1. Many customers have never heard of antitrust laws, but if these legislation are implemented efficiently and responsibly, they can save millions and even billions of dollars in illegal overloads a year. Most states, like the federal government, have antitrust laws. In essence, these regulations ban company activities which unreasonably deprive customers of competitive advantages, leading to greater prices for lower products and services

Legislation on antitrust protects competition. By ensuring reduced prices and fresh and better products, free and open competition advantages customers. In a freely competitive market, every competing company will usually attempt to attract customers by reducing their prices and improving the quality of their products or services. It also stimulates companies to discover fresh, innovative and more effective manufacturing techniques through competition and the profit possibilities it provides.
By lowering prices and improving products and services, consumers profit from competition. In the competitive fight, companies that fail to comprehend or respond to consumer needs may quickly discover themselves losing out.

The Sherman Act prohibits all contracts, combinations, and conspiracies that limit interstate and foreign trade unreasonably. This involves a number of contracts. Fixing price rivals, rigging offers, and allocating clients. Also, the Sherman Act makes monopolizing any portion of interstate trade a crime. An illegitimate monopoly occurs when only one company controls a product or service market and has acquired that market authority, not because its product or service is superior to others, but by suppressing competition with anticompetitive behaviour.

2. It is essential for manufacturers to concentrate on doing more with less on our finite planet, where natural resources are becoming increasingly difficult to come by. Subsidies tend to decrease producers ' incentives to increase effectiveness and change their focus from agriculture to agricultural subsidies. As a consequence, with more, many end up doing less.

India, for instance, subsidizes energy costs to pump water for farming, encouraging manufacturers to pump more water than they need. This has made Indian manufacturers one of the least effective consumers of water in the world. Because food and water are in brief supply, assistance for those who generate more food with less water would be a more efficient way to operate the system.

This can lead to soil degradation, depletion of groundwater and other adverse effects on the environment. Furthermore, agricultural subsidies and price supports can also distort worldwide commodity markets, influencing the global economy, affecting national security, food security, and poverty.

As incomes per capita and consumption rise worldwide, the last thing we need is market distortions that send uncertain signals to manufacturers about food prices and worldwide demand. Agricultural subsidies could undermine attempts to promote effectiveness and sustainable agriculture unless treated cautiously. And that, in turn, could render many individuals totally unwilling to invest in sustainability.