MICROECONOMICS
MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
Question
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Chapter 15, Problem 5QAP

(a)

To determine

The reason why mergers occur if they are not especially profitable.

(b)

To determine

Explain the new policy of government on merging.

(c)

To determine

The best antitrust policy that is apt for today’s economy.

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Part 1. Suppose that you overhear a foursome of physicians on the golf course discussing the prices they charge for an office visit. Suppose further that you hear them reach an agreement to all charge a fee of $ 100 for an office visit. What is such an agreement called in antitrust policy, and what antitrust law may have been violated? Part 2. Suppose that emergency room services in the city of Frederiksberg are provided by three hospitals. Two of the hospitals each have a market share of 40% and the third hospital has a market share of 20%. The two largest hospitals plan to merge. Compute the pre-merger and post -merger HHI for this market. Based on the hospital merger guidelines, would this merger likely be challenged by the antitrust authorities?
U.S. antitrust laws are designed to prohibit monopolization and encourage competition. Why, then, does the government erect barriers to entry and create monopoly power by granting firms patents?
Is the following statement correct? "The antitrust laws in reality deal less with monopolies than with oligopolies."
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