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what are antitrust policy and regultion?

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How does antitrust policy and regulation affect economic welfare? Please explain in details. Please include any citations (APA) resources, if necessary. Thank you!

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Solution Summary

The following discusses market structure and why antitrust policies are important to ensure competitive markets. Additionally, a discussion of natural monopoly is provided. More specifically, the different ways that natural monopolies are regulated to ensure that the cost savings are passed on to consumers.

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In microeconomics we study market structure. The continuum of market structure ranges from perfect competition at one end of the continuum to monopoly at the other. Recall that with perfect competition we gained maximum social welfare, i.e. consumer and producer surplus. with monopoly we have a reduction in consumer surplus and a gain in producer surplus with dead weight loss to society. From a policy maker perspective the goal is to maximize social welfare so policy makers are concerned with market structure and market outcomes. When you covered monopoly in class you probably studies the Microsoft anti-trust case and the history of anti-trust policy in the U.S. and elsewhere. One ...

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