Assignment:
Read the review attached, Prescription-Drug-Pricing-Class Use the document Antos, J., Capretta, James C. AEI Economic Perspectives, July 2018. After reading this review,
A. Determine the market structure (type) of prescription drug system of the United States.
B. What are the characteristics of this market structure?
C. Is this system resource allocative efficient?
This is an excerpt from an article authored by Gerald W. Scully, Emeritus professor of Economics at the University of Texas at Dallas. This article is published at EconLib by Kenneth A. Small
By their very nature, sports leagues are cartels that exclude competition from other companies. You cannot start a baseball team and hope to play the Yankees unless you can get Major League Baseball (the cartel) to grantyou a franchise. The antitnict laws prohibit cartels, but professional sports is the only private business in the United States that is largely exempt from those laws. Ever since a 1922 court decision (Federal Baseball Club of Baltimore v. National League et at), baseball has been totally exempt. No other sport enjoys such a blanket exemption from antitrust, but all professional team sports have a labor exemption and, since the Sports Television Act of 1961, a broadcast exemption.
All of the leagues have collusive agreements that govern the selection, contractual arrangements, and distribution of players among the teams. Collectively, these agreements grant a degree of monopsony power (monopoly power over the right to buy something-in this case, player services) to owners. The owners exploit this power by paying the players less than their incremental contribution to revenue.
After reading this, illustrate using a graph(s) (up to 2 graphs) how a U.S. Sports League (pick one sports league such as the NFL, NHL, MLB, NBA) earns higher profits when in a cartel agreement.
Instruction: create the illustration per this question (use online drawing tools OR graph on paper, take a picture and upload OR graph, save as PDF and submit).
Reference Today's Economic Puzzles: A tale of Weakening Competition. After reading this article Today's economic puzzles_ A tale of weakening competition.pdfPreview the document respond to these questions.
Explain how market concentration leads to
- higher prices,
- less competition,
- wage and income stagnation, and
- slows productivity in the short-run