÷ÈÓ°Ö±²¥

Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology required having a wire running to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT\&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.) What real world changes made the deregulation possible?

Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology required having a wire running to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT\&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.) What might some of the negatives of deregulation be?

How do we measure a Herfindahl-Hirshman Index? What does a low measure mean about the extent of competition?

Why can it be difficult to decide what a "market" is for purposes of measuring competition?

What is a tie-in sale? How might it reduce competition and when might it be acceptable?

What is predatory pricing? How might it reduce competition, and why might it be difficult to tell when it should be illegal?

What is deregulation? Name some industries that have been deregulated in the United States.

Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the benefit of consumers?

Does either the four-firm concentration ratio or the HHI directly measure the amount of competition in an industry? Why or why not?

What would be evidence of serious competition between firms in an industry? Can you identify two highly competitive industries?