Question

Explain what the specific issue is and what the specific regulation or antitrust action is. What is the interest of society that the government is intending to serve by this law, action, or regulation?

Answer 1

Specific issue is free and fair competition and preventing any big firm from monopolizing the market. Resolving the issue, will help to maintain a free and fair competitive environment where all the companies irrespective of the size, can compete and grow. For this purpose, regulation of anti-trust action is implemented that ensures that no any firm can manipulate the market to drive out smaller firms, and prevents the big players from implementing practices such as price fixing, price discrimination and monopolization. The specific laws for anti-trust action are Sherman Act and Clayton Act to preserve the free market principles.

The government wants to serve the interests of the society in terms of high quality products and at a lower price offered to the consumers. It is only possible, when there are many firms competing with each other. In this case, the bargaining power shifts towards the consumers. As a result, society is benefited. If monopolization takes place, then consumers have to face inefficiency and pay higher prices. Prices will also be regularly increased by the monopoly firm.