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Apple's Antitrust Violations

Research authoritative articles using the news for a recent case of antitrust investigation. Choose a case from any industry and any part of the world about a recent case of antitrust. Based on the case answer the following questions.

1. Why was/were the firm(s) investigated for antitrust behavior?
2. Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.
3. Given your findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? provide real world examples of where this may be the case to strengthen your position.
4. Provide at least one example of a case where having a monopoly or oligopoly may actually benefit the society.

Solution Preview

1. Why was/were the firm(s) investigated for antitrust behavior?

"Apple had conspired with five of North America's largest book publishers in a scheme to raise and fix e-book prices" (Buchanan, 2013).

2. Identify some of the costs (pecuniary and non-pecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.

This is how the case unfolded:

Amazon has been an established online seller of e-books. It sets the standard price of new e-books at $9.99 in agreement with the major publishers such as Hachette, HarperCollins, Macmillan, Penguin, Simon & Schuster, and Random House.

Publishers, however, worry that Amazon may perpetually control the e-book marker at such rock bottom prices.

They turned their attention to Apple to sell their e-books. All the publishers, except Random House, "worked together on a scheme to set e-book prices higher, making ...

Solution Summary

The discussion specifies the antitrust violations committed by Apple. It agreed on the issue that not all monopolies or oligopolies are bad for society.

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