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Homework answers / question archive / In order to protect consumers from predatory business practices, governments in open-market economies often establish antitrust laws
In order to protect consumers from predatory business practices, governments in open-market economies often establish antitrust laws. The Canadian Competition Act, for example, is intended to protect consumers by prohibiting anticompetitive business practices and promoting competition in the Canadian marketplace. Evaluate the wisdom of having the Competition Bureau (responsible for the administration and enforcement of the Competition Act) use profit as a measure of monopoly power in deciding whether to prosecute a case. How would such a rule be expected to affect the behavior of firms with high profits? In what ways might any changes induced by such a rule be socially beneficial, and in what ways might they be socially harmful?
