Monopoly and Antitrust Policy

Monopoly and Antitrust Policy

A monopoly in economics, as well as business, refers to a situation in a market in which one or a group of producers control how goods and services get to the market.  In this case, there is a restriction in the entry of new products (Hawley, 2015). The government, however, sets up laws against this monopoly behavior known as the antitrust policy. Antitrust policy is a law used by the government against these monopolistic behaviors to ensure a desirable and more competitive market. In the US, the antitrust implementers are usually the US Bureau of Justice and the Federal Trade Commission (Martin, 2018). The implementation of these antitrust laws has by so far raised the yields that were diminishing as well as the cost. Antitrust policies, as well as regulation, have played a significant role in affecting the market power. In the US, the antitrust laws are more comprehensive and strict than in any other industrialized nation. Other industrialized countries have minimal antitrust laws because of their primary focus on foreign competition. The central concept of interest in this study is the concept of market power and monopoly power. We will look at the relevance of monopoly power and market power in the analysis of antitrust laws.

It is a requirement in most of the antitrust rules to show that the one in question is more likely to obtain monopoly power and market power (Martin, 2018). The claims when it comes to monopolization require that there should be sufficient proof that indeed the defendant exhibits monopoly power. For an illegal attempt of monopolization to take place, there should be a dangerous probability that the defendant is likely to succeed in acquiring a monopoly. This view is according to a majority point of view. The Justice Department measures the legality of corporate mergers. The legality is purposed to provide guidelines to facilitate its exercise of implementing antitrust laws against mergers which are denied a permit to enhance market power. The first step taken by the department of justice is to determine the legality of joint ventures to achieving market power. Market power or monopoly power is a central and crucial issue in most cases of antitrust (Khan and Vaheesan, 2017). The continuous spread on the market power role as well as its increased emphasis in antitrust rules goes well with the present common strains of the analysis of antitrust policy. The influence of these analytical theories relies on the increasing absorption of market power standards. There have been lots of confusion on the theoretical basis of antitrust laws arising since it has been difficult to understand whose interests they are created to protect.

According to section one of the Sherman Act, the law forbids trade restraint. When it comes to section two, it states that monopolization or an attempt to monopolize is unlawful. The Federal Trade Commission Acts as well has forbidden competition methods that are not fair. The Clayton Act, on the other hand, rejects and talks about arrangements that lessen competition or create a monopoly (Hawley, 2015).  None of these sections have a meaning that is constant. If at all a more ambiguous antitrust policy could be devised, it would be much better. In this case, judges will tend to select their favorite candidates to defend because the statutes are not specific in telling them whose interest they are to protect (Martin, 2018). Antitrust policies should, therefore,  can be viewed by consumers as ‘consumer welfare prescription. For this kind of favoritism not to take place, the world today is calling on antitrust policy enforcers to balance interests affected by a decision in business. If a monopoly tends to reduce market competition it should be termed as unfair. But if at all it has no direct effect on the market competition there should be precisely no reason to implement antitrust laws undermining it. A decision to interpret antitrust laws designed to look out for the protection of consumer welfare does not make the laws predictable or uncomplicated. From the consumer welfare point of view, the antitrust laws are correct as they focus on market power. When market prices exceed the levels of competition, there is a reduction in consumer welfare.

The courts of late find it confusing to understand whether monopoly power is similar to market power. As a result of an evolution of definitions for market power and monopoly power, courts may experience difficulties in determining the more appropriate standard for various antitrust violation trusts. Market power and monopoly power are qualitatively similar concepts as they both refer to an anti-competitive strength of the economy forced by a firm (Khan and Vaheesan, 2017. Instead of the exertion of power, the firms should focus on ways of achieving the potential. Antitrust policies are economically based on efficiency. Monopoly can result in inefficient resource use compared to the outcomes in competitive results. The understanding of the significance of monopoly as well as its dangers to the market power makes it easier to draft and implement antitrust laws to protect the interests of the economy. Antitrust laws move the economy of a state closer to its competitive state.




Hawley, E. W. (2015). The New Deal and the problem of monopoly. Princeton University Press.

Khan, L. M., & Vaheesan, S. (2017). Market power and inequality: The antitrust counterrevolution and its Discontents. Harv. L. & Pol’y Rev.11, 235.

Martin, S. (2018). Dispersion of power as an economic goal of antitrust policy. In Power in Economic Thought (pp. 251-290). Palgrave Macmillan, Cham.