Pure Monopoly exists when a single firm is the sole producer of a product for which there
Question:
Pure Monopoly exists when a single firm is the sole producer of a product for which there are no close substitutes (McConnell, 234).
Antitrust laws are designed to preclude this type of economic "dictatorship" of a product or services market.
Through 1982, Bell Telephone (aka, AT&T) possessed a monopoly of the telephone service in the United States and its primary subsidiary, Western Electric, manufactured most telephonic systems. No matter where you lived, rates were set by Bell Telephone. There was no competition. This combined feature of providing the service AND the manufacturing of the associated equipment is known as "Vertical Integration."
The US Department of Justice began Antitrust proceedings in 1974 to break the monopoly hold of Bell Telephone leading to the Landmark Antitrust case, United States v. AT&T. Settlement was reached in 1982 between the DOJ and ATT, resulting in the breakup of AT&T/Bell Telephone into seven regional "Baby Bells."
ESSAY QUESTION. Why was this Antitrust Litigation justified and necessary? What has been the long-term ramifications/ benefits of this litigation to this day? From 1982 to the present, what did the settlement agreement produce in terms of competition, cost, and quality of service? (Hint: imagine yourself as an Antitrust Lawyer presenting an argument defending the litigation and the ultimate outcome.)
Expert Answer:
IN TR ODUCT ION The economic structure of the United States has been a source of pride for generations It has been heralded as a force for economic growth innovation and social mobility But the struct... View the full answer
