Question 1

What are the differences between the ALCOA case and the Standard Oil and American Tobacco cases in terms of the Court's approach to antitrust law?

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Question 2

How has increased international competition changed antitrust policy in the United States?

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Question 3

Suppose your professor has announced to the class that she grades on a curve. The top scorer and those who score at least 95% of his or her score get an A, the next lower five percent (90 - 95% of his or her score) get a B, the next lower five percent (85 - 90% of his score) get a C, and so on. While studying in the library, you see a number of people from the class gathered together, and wander over to see what they are talking about. One of the students is proposing to the others that a cartel be formed. "It will be really easy to make sure we all get A's," he says to the others. "All we need to do is agree on a percentage score low enough that anyone can get it, and all get around the same score ... and then she'll have to give us all As! I propose we all try to get a score of 50 percent."
Offer several reasons why the professor need not be overly concerned that such a plot will ever be successful and ruin the integrity of her grading system. Briefly explain what this example has to do with oligopoly theory.

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Question 4

You are a manufacturer of fine fountain pens. The industry you are a part of consists of only a handful of companies (such as Mont Blanc, Pelican, Aurora, Parker, and Waterman). You are organizing a fountain pen association whose purpose is to coordinate activities with your fellow pen makers. What incentive can you offer to your competition to join your association? Why might some of them be reluctant to join?

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Question 5

Explain the difference between the judgment by performance and the judgment by structure methods of assessing competition.

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Question 6

Why have new types of antitrust remedies recently developed?

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Question 7

Why, in recent years, have many potential mergers never even proposed? Give three reasons why the government has been lenient in interpreting anti-trust laws.

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Question 8

Predatory pricing is a pricing strategy by which firms keep their prices low to prevent potential entry by competition. Is it true that all firms that are found pricing their products low are in violation of antitrust policy?

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Question 9

Over time both the judgment by performance and judgment by structure standards have been used in deciding antitrust cases in the U.S. Briefly trace the history of the application of these standards, including references to key cases as appropriate.

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Question 10

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

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Question 11

What is antitrust policy? What does "trust" mean in this context?

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Question 12

Consider two industries described by the data below. Should we use a structural analysis of markets approach or a contestable market approach to analyze the competitiveness of each industry? Analyze the industries using the correct approach and explain what information we need to use the other approach. $$\begin{array} { c c c } 
\text { Industry } & \text { Herfindahl index value } & \begin{array} { c } 
\text { Four-firm } \
\text { concentration ratio }
\end{array} \
\text { A } & 7,500 & 80 \
\text { B } & 1,000 & 20
\end{array}$$

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Question 13

If the four-firm concentration ratio is 80, what is the highest Herfindahl index that industry could have? What is the lowest?

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Quiz 15: Monopolistic Competition and Oligopoly