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Micro Chapter 30

Micro Chapter 30. Presentation 1. 2011 IRS Tax Brackets. Sherman Anti-Trust Act (1890). All contracts, trusts, and restraints of free trade are illegal Having or conspiring to have a monopoly is illegal Also illegal to fix prices. Clayton Act (1914). Strengthened the Sherman Act

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Micro Chapter 30

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  1. Micro Chapter 30 Presentation 1

  2. 2011 IRS Tax Brackets

  3. Sherman Anti-Trust Act (1890) • All contracts, trusts, and restraints of free trade are illegal • Having or conspiring to have a monopoly is illegal • Also illegal to fix prices

  4. Clayton Act (1914) • Strengthened the Sherman Act • Outlawed price discrimination • Prohibits tying contracts- when a producer requires you to buy one product and then another (Kodak requiring that they develop film) • Corporations can’t obtain a majority of their competition’s stock • No Interlocking Directorates- director of one firm can’t be on the board of his competition

  5. Horizontal Merger (Integration) • When firms in the same industry merge and limit competition • EX- Exxon with Mobil

  6. Vertical Merger (Integration) • A merger between firms at different stages of production • Ex- Oil company owning the oil wells, pipelines, oil refineries, and gas stations

  7. Herfindahl Index • US government uses this when looking at monopoly power • Usually challenge a merger with index > 1800 • If the merger adds more than 100 points

  8. Examples of Blocked Mergers • Staples and Office Depot • WorldCom and Sprint • DirectTV and Dish

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