Economics Essay Example | Topics and Well Written Essays - 1500 words - 33

Economics - Essay Example Looking at the antitrust policy, is it indeed protecting the competition or preventing it? The advantages of free competition are dissected in this paper as well. The case of the state against major gypsum board manufacturers and its various officials is an example of a successful antitrust trial case which has convicted the defendants in just nineteen weeks. Successful in the sense that antitrust cases heard after a few years are not unusual and most often, they are dismissed (Baumol & Blinder, 1998). The antitrust policy are programs created to protect small businesses by preventing monopoly in businesses as well as the engagement of big firms to â€Å"undesirable practices† (Baumol & Blinder, 1998). This policy started in1892 as an effort of the Supreme Court of Ohio to dissolve the growing monopoly of the Standard Oil Trust, thus, the term antitrust was coined (Baumol & Blinder, 1998). As a fast growing company, Standard Oil and its connected companies somehow have grown to lack confidence in the reliability of their alliance that they needed a policy to control their decisions. The policy primarily aims to foster competition rather than prevent it, which is a good thing as it gives equal opportunities for both big and small entrepreneurs to succeed. The gypsum board manufacturers were found to have violated this policy, killing the competition through interseller price verification. This is the practice of calling competing manufacturers to find out current prices offered to specific customers for them to fix a price on their product. Here, the manufacturers purposed to organize to a pricing scheme to control the market. One of the violations determined in this case was against section 1 of the Sherman Act which forbids all contracts, combinations and conspiracies in restraint of trade as well as the monopoly in interstate and foreign trade (Baumol & Blinder, 1998). There are four elements