As this chapter explains, a monopoly is an industry structure where only one firm provides a good or service that has no close substitutes. This question explores the last part of this definition further.
a. At one time Sirius Satellite Radio and XM Satellite Radio were the only two satellite radio providers in the US. The Department of Justice (DOJ) and the Federal Communications Commission (FCC) approved the merger of the two companies in 2008 even though SiriusXM would then control 100 percent of the satellite radio market. How do you think the two companies convinced the DOJ and the FCC to allow the merger to proceed?
b. In 1947, the United States government charged the DuPont Company with a violation of the Sherman Act. The government argued that DuPont was monopolizing the cellophane market. At trial, the government showed that DuPont produced nearly 75 percent of all of the cellophane sold in the US each year. Nonetheless, the U.S. Supreme Court ruled in favor of DuPont and dismissed the case. How do you think DuPont convinced the Supreme Court that it did not violate the Sherman Act?