1. Promoting and Protecting Competition
How does the government work to ensure that free markets are free and that consumers benefit from competition?

2. Perfect Competition Prices set by supply and demand
Many buyers and sellers

3. Monopoly No competition or a substitute good
High prices & low quality products
Sherman Anti-trust Act (1890)
banned illegal business combinations and monopolies

4. Examples of Monopolies Broken up by the Government
AT&T in 1974
J.P. Morgan’s Northern Securities in 1904

5. John D. Rockefeller’s Standard Oil in 1911

6. Microsoft in 2004

7. Natural Monopolies
LEGAL: Local utilities like water, electricity, natural gas, cable, etc.
Competition isn’t efficient, so businesses are allowed to be monopolies but are heavily regulated by the govt. to ensure proper market practices.

8. Oligopoly Market controlled by a few – LEGAL
Ex. Soft drinks, Cell phone providers, Airlines, Car manufactures

9. Mergers
Combination of businesses – LEGAL as long as the merger does not create a monopoly.

10. Horizontal Mergers Merger of “like” companies for efficiency.
Ex. BellSouth/Cingular/SBC/AT&T

11. Vertical Merger Merge different levels/stages of production.
Ex: Hog farm & trucking company

12. Conglomerates Merger of various businesses for profit
Ex. GE – electricity, insurance, real estate, NBC