The United States has a variety of regulations to address th

The United States has a variety of regulations to address the economic harm resulting from monopoly power in an industry. This includes the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These acts were aimed at restricting the formation of cartels and monopolies to protect consumers and ensure competition. The article The Oligopoly Problem argued that oligopolies fall through the cracks of these regulations and leave consumers unprotected from harmful business practices where industries are highly concentrated. Read the article and respond to the following in your initial post:

What are examples of firms in an oligopolistic market that abuse their power?

Explain how they abuse their power and describe the impact on consumers.

Do you agree with the author’s feelings about increased government oversight of such industries? Why or why not?

Solution

According to the Article, the firms that are abusing their position in the market are: T- mobile Verizon AT&T Sprint Procter & Gamble Colgate-Palmolive The Atlantic – Airline company The Delta US Airways Visa MasterCard The oligopoly of the companies like T-mobile, Verizon, AT&T, and Sprint where the consumers were being charged of termination fees, overage charges, and other unfriendly practices being charged by these giants. Pricing fixation by the bigger companies are also a common practise, this was seen in the case of Proctor and Gamble and Colgate and Palmolive. The Airline giants the Delta and US Airways also fixed prices of the air tickets. In some cases like that of, Master Card and American Express attempted to control the market by creating parallel policy in which it made sure that no bank would honour American Express Credit Cards and in other companies like, the Airlines and the unites tried to check competition by acquiring all the major slots at important airport like Chicago, New York and Washington. I agree with the author, there has to be policies to check the influence of such oligopolistic companies in the market. When a few large companies tie up and make strategies that discourages other companies from entering into the market then these companies are working as monopoly. It does not attracts the government eyes just because there are more than one company in the market but when these companies uses practises like fixing the prices of the goods then it is very difficult for the smaller companies to enter the market. Increased government oversight is necessary to check problems like hidden costs as seen in the case of the telephone giants that are using the costs to cheat their customers. There should also be a check for the exclusionary rules or else no new products or firms entering the market. When a few companies control the market the consumer are forced to choose from the limited number of the products and the companies can formulate policies to even restrict other companies from the market.