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Overview on Economics - Essay Example

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Antitrust is primarily concerned with the structure of markets along with the bargaining that goes on within the market. Consequently, the absolute cost of redistributing various resources is as vital as the transaction costs of arranging for their movement. …
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Essay Overview Antitrust is primarily concerned with the structure of markets along with the bargaining that goes on within the market. Consequently, the absolute cost of redistributing various resources is as vital as the transaction costs of arranging for their movement. Antitrust policy can be said to be pertinent not merely because of the associated transaction costs but also due to the costs of the choices about early resource deployments as well as subsequent movement. At various periods in its history, antitrust policy has provided greater or lesser weight to the role of transaction costs rather than the absolute costs of resource movement (Hovenkamp, 2012). This research study provides explanation to the various aspects of the antitrust behavior in a generalized form along with the range of cost associated with it. In this regard, real world example is provided i.e. the case associated with United States v. Apple, Inc. Reasons for the Investigations for Antitrust Behavior Apple Inc, one of the world’s largest technology corporations violated antitrust law by engaging in a plan to freeze the prices of e-books, as stated by a federal judge in a suit brought by the U.S. government. The mentioned case is U.S. v. Apple Inc., 12-cv-02826, U.S. District Court under Southern District of New York (Manhattan). A federal judge ruled that Apple had unlawfully contrived with five among the six leading publishers to attempt to increase prices in the emerging e-books market. The respective publishers include CBS Corp.’s Simon & Schuster, Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan unit, Pearson Plc’s Penguin unit, Lagardere SCA’s Hachette Book Group, and News Corp.’s HarperCollins. The Justice Department issued a statement that “Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so” (The New York Times Company, 2013; New Jersey On-Line LLC , 2013). In this regard, it also supplemented that “This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions” (The New York Times Company, 2013; New Jersey On-Line LLC, 2013). Cost Associated With the Antitrust Behavior Seniority, employee cooperatives, tenure and many additional fringe benefits-instead of improved money payments or salaries can be composed of a combination of both pecuniary & non-pecuniary costs. In relation to monopolistic situations, the enticement in order to adopt such benefits is determined to be quite high on behalf of the owners of the organizations. The relative cost of take-home affluence or wealth for the owners is higher; hence they are more enthusiastic to utilize other consumption channels (Alchian & Kessel, n.d.). Antitrust Act On 11th April 2012, the US government filed a public antitrust grievance claiming that Apple, Inc. (“Apple”) and five among the six leading publishers within the United States (“Publisher Defendants”) controlled rivalry in the sale related to e-books, in breach of the Section 1 of Sherman Act, 15 U.S.C (The United States Department of Justice, 2012). In this similar context, it is observed that foreign business cases can include nearly every condition of the antitrust laws. The agencies do not distinguish in the enforcement of the antitrust laws on the basis of the nationality of the parties involved in the case. Moreover, the agencies also do not utilize their constitutional authority to advance various non-antitrust related goals. In this regard, two antitrust acts such as Sherman Act & Clayton Act have been identified and have been discussed below. Violation or breach of the Sherman Act may possibly be prosecuted as criminal or civil offenses. Any conduct that the department prosecutes criminally is restricted to conventional per se crime of the law, which usually encompasses price-fixing, customer allocation, bid-rigging, or other cartel activities. On the other hand, The Clayton Act, 15 U.S.C. 12, enlarges the common exclusion of the Sherman Act and addresses anticompetitive challenges in their incipiency (The U.S. Department of Justice & The Federal Trade Commission, 1995). Research on Monopolies and Oligopolies It is true that the prices of the products or services in the monopoly market are generally higher as compared to the prices related to the perfect competition. Monopolies can be more efficient because of the advantages from economies of scale. This is mainly vital for firms functioning in a natural monopoly. As a real world example, it can be said that Google has monopoly command on search engines but it serves the society by a considerable extent (Katz, 2012). Conversely, though the oligopoly market seems to be an inefficient market but it serves the society in terms of focusing on innovations and economics of scale. With a range of advantages in both monopoly and oligopoly markets, they serve the society by a considerable extent. On the contrary, oligopoly market has the following advantages: Innovation Along with the other four market forms such as perfect completion, monopoly, monopolistic and duopoly, oligopoly market is the likeliest one to formulate the innovations that facilitate to progress the height of technology, enlarge production capabilities, promote economic expansion and lead to the developed living standards (The University of North Carolina, 2008). Economics of Scale Oligopoly businesses are also capable to derive benefit of economies of scale that facilitates to decrease production related costs along with prices. Through the innovation and the reduction of the prices society gets benefitted (The University of North Carolina, 2008). References Alchian, A. A., & Kessel, R. A. (n.d.). Competition, monopoly, and the pursuit of money. Retrieved from http://www.nber.org/chapters/c0605.pdf Hovenkamp, H. J. (2012). Antitrust and the costs of movement. Antitrust Law Journal, 78(1), pp. 67-104. Katz, J. (2012). Google's monopoly and internet freedom. Retrieved from http://online.wsj.com/article/SB10001424052702303830204577448792246251470.html New Jersey On-Line LLC. (2013). Apple violated antitrust laws in e-book case, federal judge rules. Retrieved from http://www.nj.com/business/index.ssf/2013/07/apple_violated_antitrust_laws.html The U.S. Department of Justice & The Federal Trade Commission. (1995). Antitrust enforcement guidelines for international operations. Retrieved from http://www.justice.gov/atr/public/guidelines/internat.htm The University of North Carolina. (2008). Oligopoly. Retrieved from http://www.unc.edu/depts/econ/byrns_web/Economicae/oligopoly.html The United States Department of Justice. (2012). United States district court for the southern district of New York. Retrieved from http://www.justice.gov/atr/cases/f291000/291014.pdf The New York Times Company. (2013). Fallout from apple’s loss on e-books. Retrieved from http://www.nytimes.com/2013/07/11/technology/judge-rules-against-apple-in-e-books-trial.html?adxnnl=1&adxnnlx=1374735605-9UHbYP/pifibnz0YNngwUg Read More
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