PHASE 2- Openstanx Ch.11: Monopoly and Antitrust Policy Flashcards Preview

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Flashcards in PHASE 2- Openstanx Ch.11: Monopoly and Antitrust Policy Deck (30)
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1

merger

two formerly separate firms combine to become a single firm

2

acquisititon

when one firm purchases another - newly purchased firm can continue to operate under former name

3

lateral merger

to firms of similar size combine to become one

4

both mergers and acquisitions lead to two formerly separate firms being under

common ownership, can reduce competition

5

requirements of mergers

at least one of firms must be above min size of sales and other conditions - must notify FTC

6

ftc

federal trade commission

7

antitrust laws

laws that giv gov pwoer to block certain mergers and maybe break up large firms into smaller ones, some conditions may be firm agrees to sell off certain parts to preserve competition

8

sherman antirtust law 1890

limit power of trusts

9

clayton antitrust act 1914

outlaw mergers / acquisition, price discrimination, tied sales - puruchase of one product commits buyer to purchase some other product

10

ftc created in

1914

11

celler - kefauver act 1950

exteded Clayton Act- restrict vertical conglomerate mergers

12

concentration radio

easures what share of total sales in industry are acct. for by largest firms (typically top 4-8 firms)

13

market share

each firm's proprtion of total sales in that market

14

four firm concentration radio

add market shares of four largest firms - shows how much of market they hold / make up

15

herfindahl-hirshman index (HHI)

calculate by summing squares of market share of each firm in industry, number of firms x percent held in market squared, gives greater weight to larger firms

16

HHI scale

less than 1000 -> ftc approves
over 1,800 -> ftc challenge
between 1,000 and 1,800 -> case by case decision

17

restrictive practicies

practices not invovling outright agreements to raise price/reduce q produced but may effect- reduce competiton, illegal to demand min reslae price maintanence agreement - requires dealers to sell for at least a certia min price

18

exclusive dealing agreement

leagl if purpose of contract is to ecnourage competition between dealers, can limit competiton

19

typing sales

customer requireents to buy one product only if customer also buys second product

20

bundling

two plus products sold as one firm sells less than min avc equals predatory pricing

21

cost plus regulation

way to regulate nautral monopoly, calculate average cost of production, add amount for normal rate of rpofit firm expects to earn, set price for customer according incentive to generate high cost

22

price cap regulation

way to regulate natural monopoly, regulator sets price firm can charge over next few years, price delclines oer time

23

deregulation

removal of gov controls over p/q in airline, railrod, trucking, natural gas

24

regulatory capture

difficulty with gov price rgualtion, firms supposedly eing regulated end up playing large role in setting regualtions they'l follow, consumers ot very well represented

25

sarbanes oaxley acat 2002

increase confidence in financial info provided by public corporation to protect investors from accting fraud

26

cmo stands for

collateralized mortgage obligations

27

cmo is what

morgage backed security

28

cdts stands for

credit default swaps

29

cds is what

insurance contracts on assets like CMOS providing payoff even if holder of CDS didnt own CMO

30

dodd frank act

attempted major reforms of financial system