After seeing the power of monopolies in the past, it is imperative that the government sets regulations. There are three main factors that lead to the importance of regulation:
1. Prevent excessive prices
2. Protect the quality of service
3. Promote competition
These three things are what monopolies in the past have got away with. Since they are the only company producing a product, they are the only company consumers can rely on. This leads to excessive prices because consumers do not have a choice on where to buy from. Furthermore, monopolies do not have to produce at the same quality they should be. This is because there are no companies they are competing with, another factor of regulation.
Based on these three fundamental ideas, the government can step in. To regulate price, price caps can be set, not allowing monopolies to overcharge. In terms of quality of product, government regulators can determine if monopolies are producing fairly. Lastly, in extreme cases, the government does have the power to break up monopolies if they see fit.
https://www.economicshelp.org/microessays/markets/regulation-monopoly/
In the US, the concept of regulation applies in the form a few antitrust laws that control for many of the factors that affect a market such as lack of competition. The Sherman Act of 1890, Clayton Act of 1914, and Federal Trade Commission Act of 1914 collectively serve as enforcement. They prevent collusive behavior on the part of companies, restricting the formation of cartels, they place regulations on mergers, and they prohibit the creation of monopolies. The Department of Justice oversees the Federal Trade Commission, which enforces these laws.
ReplyDeletehttps://www.cfr.org/backgrounder/us-antitrust-policy