Micro Ch. 19 & 21 – Flashcards
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Alcoa case
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a 1945 case in which the courts ruled that the possession of monopoly power, no matter how reasonably that power was used, was a violation of the antitrust laws; temporarily overturned the rule of reason applied in the US Steel Case
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antitrust policy
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the use of antitrust laws to promote competition and economic efficiency
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behavoiralists
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say that the relationship between industry structure and firm behavior is uncertain
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cease-and-desist order
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an order from a court or govt agency to a corporation or individual to stop engaging in a specified practice
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celler-kefauver act
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the federal law of 1950 that amended the Clayton Act by prohibiting the acquisition of the assets of one firm by another firm when the effect would be less competition
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clayton act
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the federal antitrust law of 1914 that strengthened the Sherman Act by making it illegal for firms to engage in specified practices including tying contracts, interlocking directorates, and certain forms of price discrimination
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conglomerate merger
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the merger of 2 firms operating in separate industries or separate geographic areas sot hat neither firm is a supplier, customer, or competitor of the other, any merger that is neither a horizontal merger nor a vertical merger.
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dupont cellophane case
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the antitrust case brought against DuPont in which the US Supreme Court in 1956 ruled that while DuPont had a monopoly in the narrowly defined market for cellophane, it did not monopolize the more broadly defined market for flexible packaging materials. It was thus not guilty of violating the Sherman Act.
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federal trade commission act
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the federal law of 1914 that est. the FTC
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horizontal merger
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the merger into a single firm of 2 firms producing the same product and selling it in the same geographic market
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industrial regulation
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the older and more traditional type of regulation in which govt is concerned with the prices charged and services provided to the public in specific industries, differs from social regulation
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interlocking directorates
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situations in which one or more members of the board of directors of a a corporation are also on the board of directors of a competing corporation, illegal under Clayton Act.
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legal cartel theory of regulation
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the hypothesis that some industries seek regulation or want to maintain regulation so that they may form or maintain a legal cartel
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Microsoft case
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a 2002 antitrust case in which Microsoft was found guilty of violating Sherman Act by engaging in a series of unlawful activities designed to maintain its monopoly in operating systems for personal computers; as a remedy the company was prohibited from engaging in a set of specific anti-competitive business practices
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natural monopoly
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an industry in which economies of scale are so big that a single firm can produce the industry's product at a lower atc than would be possible if more than one firm produced the product
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90-60-30 rule
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a rule that shows whether or not market power exists by considering the share of the market held dominant by the firm. 90%=definitely a monopolist, 60%=probably a monopolist, 30%=not a monopolist. Market shares depend on how clearly the market is defined
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per se violations
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collusive actions, such as attempts by firms to fix prices or divide a market, that violations of the antitrust laws, even if the actions themselves re unsuccessful
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public interest theory of regulation
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the presumption that the purpose of the regulation of an industry is to protect the public (consumers) from abuse of the power possessed by natural monopolies
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rule of reason
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the rule stated and applied in the US Steel Case that only combinations and contracts unreasonably restraining trade are subject to actions under antitrust laws and that size and possession of monopoly power are not by themselves illegal
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social regulation
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regulation in which govt is concerned with the conditions under which G and S are made, their physical characteristics, and the impact of their production on society, differs from industrial regulation
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sherman act
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the federal antitrust law of 1890 that makes monopoly and conspiracies to restrain trade criminal offenses
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standard oil case
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a 1911 antitrust case in which Standard Oil was found guilty of violating the Sherman Act by illegally monopolizing the petroleum industry. As a remedy the company was divided into several competing firms.
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structuralists
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assume that highly concentrated industries will behave like monopolists and any firm with a very high market share is a legitimate target for antitrust action
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tying contract
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a requirement imposed by a seller that a buyer purchase another (or other) of its products as a condition for buying a desired product. This is forbidden by the Clayton Act
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u.s. steel case
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the antitrust action brought by the federal govt against the US Steel Corporation in which the courts ruled, in 1920, that only unreasonable restraints of trade were illegal and that size and the possession of monopoly power were not by themselves violations of the antitrust laws
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vertical merger
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the merger of one or more firms engaged in different stages of the production of a certain final good
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wheeler-lea act
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the federal law of 1938 that amended the Federal Trade Commission Act by prohibiting unfair and deceptive acts or practices of commerce (such as false and misleading advertising and the misrepresentation of products)
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discrimination effect
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a measure of the cost or disulitilty of prejudice; the monetary amount an employer is willing to pay to hire a preferred worker rather than a non-preferred worker of the same ability
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Earned-income tax credit (EITC)
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a refundable federal tax credit for low-income working people designed to reduce poverty and encourage labor-force participation
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entitlement programs
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gov't programs such as social insurance, Medicare, and Medicaid that guarantee particular levels of transfer payments or non-cash benefits to all those who fit the programs' criteria
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equality-efficiency trade-off
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the decrease in economic efficiency that may accompany a decrease in income inequality; the presumption that some income inequality is required to achieve economic efficiency
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Gini ratio
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a numerical measure of the overall dispersion of income among households, families, or individuals; found graphically by dividing the area between the diagonal line and the Lorenz curve by the entire area below the diagonal line
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income inequality
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unequal distribution of an economy's total income among households or families
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income mobility
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the extent to which income receivers move from one part of the income distribution to another over some period of time
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Lorenz curve
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a curve showing the distribution of income in an economy. The culmulated percentage of families (income receivers) is measured along the horizontal axis and the culmulated percentage of income is measured along the vertical axis
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medicaid
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a federal program that helps finance the medical expenses of individuals covered by the Supplemental Security Income (SSI) and Temporary Assistance for Needy Families (TAFN) programs
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medicare
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a federal program that provides for compulsory hospital insurance for senior citizens, low-cost voluntary insurance to help older Americans pay doctor's fees and subsidized insurance to buy prescription drugs. Financed by payroll taxes
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noncash transfers
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a gov't transfer payment in the form of G and S rather than money ex) food stamps, housing assistance, and job training. Also called in-kind transfers
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occupational segregation
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the crowding of women or minorities into less desirable, lower-paying occupations
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poverty rate
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the percentage of the population with incomes below the official poverty income levels that are est. by the federal gov't
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public assistance programs
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gov't programs that pay benefits to those who cannot earn income due to permanent disabilities or because they have very low income and dependent children; financed by general tax revenues and viewed as public charity
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social insurance programs
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programs that replace the earnings lost when people retire or are temporarily unemployed, that are financed by payroll taxes, and that are viewed as earned rights
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social security
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the social insurance program in the USA financed by federal payroll taxes on employers and employees and designed to replace a portion of the earnings lose when works become retired, disable, or die
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statistical discrimination
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the practice of judging an individual on the basis of the avg. characteristics of the group to which he or she belongs rather than on his or her own personal characertisitics
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supplemental nutrition assistance program (SNAP)
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a gov't program that provides food money to low income recipients by depositing electronic money onto Electronic Benefit Transfer (EBT) cards. Formerly known as the food-stamp program
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supplemental security income (SSI)
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a federally financed and administered program that provides a uniform nationwide minimum income for the aged, blind, and disabled who do not qualify for benefits under Social Security in the USA
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taste for discrimination model
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a theory that views discrimination as a preference for which an employer is willing to pay
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temporary assistance for needy families (TANF)
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a state administered and partly federally funded program in the USA that provides financial aid to poor families; the basic welfare program for low-income families in the USA; contains time limits and work requirements
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unemployment compensation
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social insurance program that in the USA is financed by state payroll taxes on employers and makes income available to workers who become unemployed and are unable to find jobs
