ECON 1100 1nd Edition Lecture 28 Outline of Last Lecture I. Shutdown?II. How does a monopoly workOutline of Current Lecture I.General factsII.Legal aspect of monopolyCurrent LectureI. General factsMonopoly screws up Pareto efficiencyProduce less, charge higher priceMonopoly leaves win-win trades (don’t happen)Don’t answer what/how/for whomII. Legal aspect of monopolyDirect regulation of prices (died out)Gov’t sets priceEx: railroads, trucking, airfare (used to be)Today: electricity & maybe natural gasAnti-trust lawsSherman Act (1890)Came from Midwest farmers -> railroads ‘screwing’ farmers & wanting to transport goods @ reasonable rateMonopolizing = felony (criminal law); gov’t brings suits; go to federal courtThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.“Corporations are people too” – Mitt RomneyActually true, as stated in lawCivil suit: sue for compensationSection 2: dominant firms (1 firm)Section 1: agreements (2+ firms)To monopolize – no true definitionSupreme Court decides in court whether broke law or notCongress only steps in if the definition is said to be ‘not how they meant it’Rule of Reason: way to decide if violated lawApplies to Sect. 2 cases & some Sect. 1US gov’t’s burden of proof2 part test to find someone guiltyAccused company has to have dominant position (measured by market share)~65-75% but still can go either wayANDAccused company must have taken some unreasonable/anti-competitive action to acquire or protect the dominant position Usually against company not customerLook @ various types of evidenceMicrosoft very good example of court
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