The study of government regulation and the competitive environment for business is relevant to all those who study business. This essay will describe the relationship between regulation and market structures and how regulation affects the market. The essay will detail the major legislation known as the Anti-trust laws.
Industrial (economic) regulation pertains to government regulation of firms’ prices, or rates, within selected industries. This type of regulation exists in an attempt to organize monopolies. Regulated firms, however, have less incentive than competitive firms to reduce costs. Industrial regulation also seeks to help companies achieve stable profits while making the market consumer friendly. Firms operating within the
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The Clayton Act of 1914 was an amendment to clarify and supplement the Sherman Act. The act prohibited exclusive sales contracts, local price cutting to freeze out competitors, rebates, inter-locking directorates in corporations capitalized at $1 million or more in the same field of business, and inter-corporate stock holdings. The Clayton Act also led to the establishment of the FTC and legalized peaceful strikes, picketing, and boycotts. The next act created was the Federal Trade Commission Act of 1914. This act prohibits unfair methods, acts, and practices of competition in interstate commerce. From this the Federal Trade commission was established. It is a presidential bipartisan committee appointed to police violations of the act. Finally the Cellar- Kefauver Act of 1950 (also known as The Celler-Kefauver Anti-merger Act of 1950) restricts anticompetitive mergers resulting in acquisition of assets. This Act is an amendment to the Clayton Antitrust Act of 1914.
There are 3 main regulatory commissions of industrial regulation: The Federal Energy Regulatory Commission established in 1930, The Federal Communications Commission established in 1934 and the State public utility commissions. Industrial regulation allows the government to regulate the prices that are charged by natural monopolies. These commissions keep natural monopolies from harming consumers and society because they do not allow the natural monopolies to charge monopoly prices. There are five