Vapulah

First, it prohibits exclusive dealing contracts, under which a sale is made on the condition that the customer agrees not to purchase from rival suppliers. Second, it prohibits requirements contracts, under which a sale is made on the condition that the customer agrees to take the entire required product from the same source. Exclusive dealing contracts and requirement contracts have the same effect. They bind a customer to a particular supplier. However, such contracts may also allow long – term planning, which reduces the costs of one or both parties. Third, it prohibits tying contracts, under [Read the rest of this entry...]

Two pieces of legislation, enacted in 1914, largely complete the structure of American antitrust law, the first of these in the Clayton act.

The Clayton Act prohibits a number of specific business practices. Section 2 of this act prohibits price discrimination:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality … where the effect of such discrimination may be substantially to lessen [Read the rest of this entry...]

The Sherman antitrust act was passed in 1890. It has two substantive provisions, which are deceptively simple:

Antitrust and economic theory: an uneasy friendship, “Yale law journal volume 87, number 7, June 1978, p. 1525.

Every contract, combination in the form of trust or otherwise, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed [Read the rest of this entry...]

Government influences the course of business in many ways. Examples are tax and tariff policy, laws that aim to prevent fraud or misrepresentation, and price controls. But our interest is in government policies that concern market performance.

Such policies fall into three broad categories: public ownership, regulation of private enterprise and what in the United States is called antitrust policy, by which the government sets the rules according to which independent firms compete. As we will see, much of industrial economics has direst policy [Read the rest of this entry...]