经典迈克尔贝叶著管理经济学与商务战略课件英文版Chap014.pptVIP

Managerial Economics Business Strategy Chapter 14 A Manager’s Guide to Government in the Marketplace Overview I. Market Failure Market Power Externalities Public Goods Incomplete Information II. Rent Seeking III. Government Policy and International Markets Quotas Tariffs Regulations Market Power Firms with market power produce socially inefficient output levels. Too little output Price exceeds MC Deadweight loss Dollar value of society’s welfare loss Antitrust Policies Administered by the DOJ and FTC Goals: To eliminate deadweight loss of monopoly and promote social welfare. Make it illegal for managers to pursue strategies that foster monopoly power. Sherman Act (1890) Sections 1 and 2 prohibits price-fixing, market sharing and other collusive practices designed to “monopolize, or attempt to monopolize” a market. United States v. Standard Oil of New Jersey (1911) Charged with attempting to fix prices of petroleum products. Methods used to enhance market power: Physical threats to shippers and other producers. Setting up artificial companies. Espionage and bribing tactics. Engaging in restraint of trade. Attempting to monopolize the oil industry. Result 1: Standard Oil dissolved into 33 subsidiaries. Result 2: New Supreme Court Ruling the rule of reason. Stipulates that not all trade restraints are illegal, only those that are unreasonable are prohibited. Based on the Sherman Act and the rule of reason, how do firms know a priori whether a particular pricing strategy is illegal? Clayton Act (1914) Makes hidden kickbacks (brokerage fees) and hidden rebates illegal. Section 3 Prohibits exclusive dealing and tying arrangements where the effect may be to “substantially lessen competition.” Cellar-Kefauver Act (1950) Amends Section 7 of Clayton Act. Strengthens merger and acquisition policies. Horizontal Merger Guidelines Market Concentration Herfindahl-Hirschman Index: HHI = 10,000 S wi2 Industries in which the HHI exceed 1800 are generally deemed “highly concen