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The First and Second Era of Antitrust Thinking
The first era of antitrust thinking occurred between 1890 and the 1950s where restrictions were imposed against giant companies. The strategy is also aimed at protecting consumers from unreasonable prices. The political and economic rationale significantly influenced the second era of antitrust thinking in the 1960s (Laudon & Traver, 2019). During this period, people perceived economic power not as an anti-competitive aspect but as a factor of increasing efficiency and lowering prices of goods and services. Therefore, large firms were free to merge with other companies.
Natural Monopolies
A natural monopoly is a term used to describe a firm that serves a vast market share without fair competition due to entry barriers due to the required significant investment. For instance, electricity utilities are provided by monopolies who can set market prices and product qualities (Laudon & Traver, 2019). The United States has taken various measures to deal with natural monopolies. The government established regulations such as price capping to prevent consumers exploitation.
Market Dominance and Anti-Competitive Behavior
Market dominance and anti-competitive behavior of firms like Amazon, Facebook, and Google can be resolved by enhancing the review of suggested mergers with the idea of safeguarding start-ups against the acquisition. This idea implies introducing antitrust reforms that focus on making it difficult for firms to merge (Laudon & Traver, 2019). The issue can also be resolved by minimizing advertising to lower sales revenue and interest among consumers, therefore splitting the market share among other small firms. The third strategy entails splitting monopolies to run independently. Amazon can be split to operate as different individual firms in their respective sectors in media, electronics, groceries, among others.
The European Model of Antitrust Differ and the American Model
The main difference between the European model of antitrust and the American model is that the former only considers consumers. At the same time, the latter considers both the consumers and the market structure—the European model of antitrust interdicts anti-competitive accords among independent market operators. The model also forbids abusive actions by dominant firms in the industry by imposing fines (Laudon & Traver, 2019). On the other hand, the American model of antitrust law considers market structure, competition, and consumers by ensuring fair competition in an open-market economy. In this case, there is no consumer exploitation through exorbitant prices.
References
Laudon, K. C., & Traver, C. G. (2019). E-commerce: business, technology, society(15ª edição). Estados Unidos: Person. Web.
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