Relationship Between Regulation and Market Structures

The study of government regulation and the competitive environment for business is relevant to all those who study business. All business candidates need to understand how the competitive environment will impact their employers and businesses. A- There are four major pieces of legislation known as the Antitrust Laws. After the U. S. Civil War, local markets changed into national markets because of transportations were improved, mechanized production methods, and sophisticated corporate structures. In the 1870s and 1880s, many firms became dominant in different industries like meat packing, railroads, coal, and tobacco. These firms often consolidated their industries and over charged its customers. The government formed laws called antitrust Acts to help control these behaviors. * Sherman Act of 1890 was formed to be brief and directly to the point: * The government would investigate organizations and companies suspected in violation of the Sherman trust act to limit monopoly. Every person who shall monopolize, or attempt to monopolize, with any person or persons to monopolize any part of the trade or commerce shall be found guilty of a felony (as later amended from â€Å"misdemeanor†). The Clayton Act of 1914 contained the desired elaboration of the Sherman Act. * Outlaws price discrimination when such discrimination is not justified on the basis of cost differences and when it reduces competition. * Prohibits tying contracts, in which a company requires that a buyer purchase another of its products as a condition to purchase the desired product. * Prohibits the acquisition of stocks of competing corporations when the outcome would be less competition. * Prohibits a director of one firm to act as a board member of another firm where the effect would be reduced competition. The Federal trade commission act of 1914 * The act gave the Federal Trade commission (FTC) the power to investigate any competitive practices at the request of any firms or on its own initiative to discover any unfair competition in the industry. * The Celler-Kefauver Act of 1950 †¢The Celler-Kefauver Act amended the Clayton Act, Section 7. It prohibits the merger of firms by acquiring tis stock. The Act closed the loophole by making sure that one firm does not obtain the physical assets of another firm when the effect can reduce competition. B- The intended purpose of industrial regulation as it applies to the following market structures: 1. Oligopoly is small groups of firms control the market. For example: AT&T, Verizon, Sprint, and T-Mobile control the cell phone industry. Industrial regulation is used to reduce the market power of Oligopolies, to prevent collusion (where small firms secretly set prices) and increase market competition. 2. Monopoly is where one company control prices in the market where there no substitute to the product. Industrial regulations are used to prevent companies from monopolizing in given markets. C- The major functions of the three primary federal and state regulatory commissions that govern industrial regulation. 1- The federal energy regulatory commission in 1930 is the jurisdiction of electricity, gas, gas pipelines, oil pipelines, and water powered sites. The major function of the federal energy regulatory is to regulate the transmission and sale of natural gas, oil pipelines, and wholesale of electricity. There are other functions that involve license and inspect hydroelectric projects and monitor and investigate energy markets. – The federal communications commission was formed in 1934 in the jurisdiction of Telephones, television, cable television, radio, telegraph, CB radios, and ham operators. The major functions of the federal communication commission include processing applications for licenses, analyzing complaints, conducting investigations, developing and implementing regulatory programs, and taking part in hearings 3- State public utility commission is f ormed in the jurisdiction of electricity, gas, and telephones. The major function of State public utility commission is to regulates the rates and services of a public utility that include water, gas, and electricity D- Social regulation is intended to deal with the broader impact of business on consumers. The government established several agencies including equal employment opportunity commission and health administration protect consumers from businesses in the late 60s. The purpose of social regulation is for the government to oversee the safety and quality of goods or products as well as the conditions of these products are manufactured. E- There are five primary federal regulatory commissions that govern social regulation. 1- Food and drug administration (1906) has the jurisdiction and function over safety and effectiveness of food, drugs, and cosmetics. 2- Equal employment opportunity commission (1964) has the jurisdiction and function over hiring, promoting, and discharge of workers. – Occupational safety and health admiration (1971) has the jurisdiction and function over industrial health and safety. 4- Environmental protection agency has the jurisdiction and function over water, air, and noise pollution 5- Consumer product safety commission has the jurisdiction and function of safety of consumer products As a company, studding the law can help in saving money, time and efforts to stay productive in the market. All business candidates ne ed to understand how the competitive environment will impact their employers and businesses.