Economics: Theory and Practice, 10th Edition

CHAPTER 14

Government and the Markets

CHAPTER OBJECTIVES

To introduce the main forms of government intervention into the operation of markets, and some reasons for this intervention.

To identify the major federal antitrust statutes and the anticompetitive practices they address.

To examine different types of mergers and their possible anticompetitive effects.

To identify the forms and organization of government regulation.

To distinguish between industry regulation and social regulation, and to offer justifications for each.

To introduce issues about the effectiveness of regulation, and policy concerns growing out of the increasing internationalization of economic activity.

In the last chapter, we saw that a seller's price, output, promotional strategy, profit, and efficiency are all influenced by the type of market it is in and degree of competition it faces. Obviously, markets and competition play an important role in economic decision making and in determining the well-being of businesses and households.

Economies where decisions are made primarily by individual businesses and households are built on the philosophy that free markets and competition should be at the foundation of economic activity. Although the U.S. economy is based on this philosophy, historically government has intervened in the operation of markets in several important ways. (Recall in Chapter 2 the discussion ...