Question

Why are entry barriers necessary for antitrust policy concerns about monopolization, price-fixing, and mergers?

Answer 1

Defining the relevant market is vital in antitrust policy because it establishes there are barriers to entry. Antitrust policy is intended to healthy competition, thus there should be robust competition in every market. The vigorous competition in any market such as monopolization, price-fixing, and mergers keeps the sellers honest, forcing them to strive continually enhance their products and services and to offer it to the customers on favorable terms. As a result customer and society benefit from this competition

Antitrust laws forbid any improper monopoly with the purpose to destroy or its competitors. These policies also forbid dominant firms to act in collusion with the purpose to impose unfair commercial practices that may result to subvert “competition on the merits” in any market that they already dominate or target to dominate by improper practice means. Also antitrust laws outlaw specific kinds of recognized commercial fraud that by their very nature are done in the market with intent to destroy competition wherein they are employed (the most notable offenders are price-fixing, bid-rigging, and horizontal market allocation).