CAUSES OF INFLATION

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CAUSES OF INFLATION In the ucta ilcd analysis of inn,lIion given above, we have referred to the basic cause of in llanon, Ihat is when aggregate demand for output tends to be excessive  relation to Ole supply of output Thus.tho causes of inflation may be grouped under two headings. These causes may operate singly or in combination with one […]

Stable Prices

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Stable Prices The third macroeconomic objective is to maintain stable prices. What exactly do economists look at when they talk about “the overall price level?” The most common price measure is the price index, known as the CPI. The CPI ‘measures the cost of a basket of goods (including items’ such as food. shelter, clothing, and medical care) bought by the […]

ANTITRUST LAWS AND EFFICIENCY

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ANTITRUST LAWS AND EFFICIENCY Economic and legal views toward regulation and antitrust have changed dramatically over the lut three decades. During the period, industries Werede regulated, and antitrust lawabandoned its mission “to put- : an end to great aggregations of capital because of the helplessness’ of the individual before them” (to quote from the 1945 Alcoa decision). Increasingly, regulation and […]

New tools for antitrust policy

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New tools for antitrust policy Most economists today agree that antitrust policy should ~ low prices and high product quality.Few kind words can be heard about monopolies. But true monopoly is extremely rare, and makers must analyze the behavior c:I a variety of different oligopolistic market structures. In the past, trust busters haw focused primarily on market shares as well as […]

Horizontal mergers

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Horizontal mergers which companies in the same industry combine-are forbidden under the Clayton Act.when the merger is likely to reduce competition in the industry substantially. Case law and government merger guidelines clarified the meaning of the vague statutory language. The government uses the Heyerdahl-Churchman Index (HHI) to evaluate mergers,” Under these guidelines, industries are divided into three groups: concentrated (HHI below 1000), […]

Recent Structural Cases

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Recent Structural Cases The most important antitrust cases of recent years involved three giant firms in two vitally important industries communications and computers. A view of the three cases reveals the flavor of modem thinking about antitrust policy. The AT&T case and the Bell Doctrine. Until the early 19805. AT&T was a vertically and horizontally inte- grated monopolist in’ the telecommunications […]

Structure Is Bigness Badnees

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Structure Is Bigness Badnees While price fixing and other illegal activities are important, the most visible antitrust cases concern the structure of industries rather than the conduct of companies. They consist of attempts to malt up large firms as well as preventive proceedings against proposed mergers of large firms.  The first surge of antitrust activity under the Sherman Act focused […]

Recent Price-fixing Cases

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Recent Price-fixing Cases An interesting academic case involved an investigation by the justice Department of the way that colleges and universities set tuition and scholarship aid. The government claimed that a small group of educational institutions conspired to reduce scholarship competition for top students by agreeing to award scholarships only on the basis of financial need and by comparing prospective aid awards to […]

Illegal Conduct

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Illegal Conduct Some of the earliest antitrust decisions concerned legal behavior. The courts have ruled that certain kinds of collusive behavior’ are illegal-per se there is simply no defense that will justify these actions. The offenders cannot defend themselves by pointing to some won objective (such as product quality) or mitigating circumstance (such as low profits). The most important class of per se […]