Antitrust

:Antitrust is also the name for a movie, see Antitrust (movie)

Arguments in favor of antitrust laws

By introducing antitrust legislation, consumers should benefit from reduced prices, better product diversity, and thus more choice. Furthermore, as the market power of large cartels is reduced, they are forced to pay more attention to the needs and wishes of individual customers.

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Large companies with huge cash reserves and large lines of credit can stifle competition by engaging in predatory pricing; that is, by selling their products and services at a loss for a time, in order to force their smaller competitors out of business. With no competition, they are then free to consolidate control of the industry and charge whatever prices they wish. At this point, there is also little motivation for investing in further technological research, since there are no competitors left to gain an advantage over.

Related Topics:
Credit - Predatory pricing - Technological

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High barriers to entry such as large upfront investment requirements in infrastructure and exclusive agreements with distributors, customers, and wholesalers ensure that it will be difficult for any new competitors to enter the market, and that if any do, the trust will have ample advance warning and time in which to either buy the competitor out, or engage in its own research and return to predatory pricing long enough to force the competitor out of business.

Related Topics:
Barriers to entry - Predatory pricing

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