Antitrust policy and industrial regulation
1. Both antitrust policy and industrial regulation deal with monopoly. What distinguishes the two approaches? How does the government decide to use one form of remedy rather than the other?
2. Suppose a merger of firms would simultaneously lessen competition and reduce unit costs through economies of scale. Do you think such a merger should be allowed?
3. In the 1980s, PepsiCo Inc., which then had 28 percent of the soft-drink market, proposed to acquire the Seven-Up Company. Shortly thereafter the Coca-Cola Company, with 39 percent of the market, indicated it wanted to acquire the Dr. Pepper Company. Seven-Up and Dr. Pepper each controlled about 7 percent of the market. In your judgement, was the government's decision to block these mergers appropriate?
4. Use economic analysis to explain why the optimal amount of product safety may be less than the amount that would totally eliminate risks of accidents and deaths. Use automobiles as an example.