Intro to Anti Monopoly

Laws
By: Paola Velez and Diomedes Morel

Entrance Ticket
Why are monopolies bad for the economy?
Be specific and provide specific examples.

Possible Answers
1. Since monopolies are the only provider, they can set pretty
much any price they choose. This is known as price-fixing.
They can pretty much do this, regardless of demand, because
they know the consumer has no choice.
2. Not only can monopolies raise prices, they can also supply
inferior products.
3. The manufacturer has no incentive to innovate, and provide
"new and improved" products.
4. They can create inflation. Since they can set any price they
want, they will raise costs to consumers (known as
cost-push inflation).

Agenda
1. Entrance Ticket
2. Notes
3. Simulation
4. Exit Ticket

Notes on the following

Antitrust: laws and regulations designed to
protect trade and commerce from unfair
business practices.
The main target of these
laws was to destroy trusts
(AKA monopolies)

Trust:
a monopoly
a company (or collection of smaller
companies under a larger one) which strives
to get rid of competition through ridiculously
low prices.
For example, the Standard Oil Co. in the 1800s

Consolidation:
A combination of two or more corporations.
The union of two or more claims or actions
at law for trial or appeal.
For example, Burger King and McDonalds
coming together as one restaurant.

Sherman Antitrust Act: an act of Congress

passed in 1890s prohibiting any contract,
conspiracy or combination
in business interests in restraint
of foreign or interstate trade.

Clayton Antitrust Act: an act of Congress in 1914

supplying additional information and/or
corrections strengthening the
Sherman Antitrust Act and establishing
the Federal Trade Commission.
prevented companies from acquiring
stock from another company(anti-monopoly)
also supported workers unions

ACTIVITY
Hand out the Worksheets

Activity Instructions
Get into 2 groups of eight
o Remainder of students sit individually...
Make sure you have a sheet of paper
o Flip to the back side
8 members in the Standard Oil Co. (industry)
o Role (monopolist)
8 members in the Railroad Co. (industry)
o Role: (monopolist)
Remainders
o Oil (industry)- Role: (competitor)
o Railroad(industry)- Role: (competitor)

Round 1- Normal Round

Students adjust prices to their rational desire
o Remember: $50 is the maximum; $10 the minimum
o For the sake of the activity, choose prices as multiples of 5
Refer to the Price-to-Consumer chart
o On the chart, look for the price you chose.
o Look for the consumer number next to it and write it on your data table
In the profit column, write the product of the price and consumers
o Multiply the price ($$$) by the amount of consumers (###)

Sherman Act in place

A federal law passed in 1890 that committed the American government to
opposing monopolies. The law prohibits contracts, combinations, or
conspiracies in the restraint of trade or commerce. Under the authority of the
Sherman Antitrust Act, the federal government initiated suits against the
Standard Oil Company and main Railroad Monopoly.
In shorter words, Congress passes a law that makes it illegal to have a
monopoly. The punishment is a fine and/or incarceration.
However, as the first version of this law, it had its flaws and loopholes which
monopolists took advantage of.

Clayton Act
An act of Congress in 1914 supplying additional
information and/or corrections strengthening the Sherman
Antitrust Act and establishing the Federal Trade Commission.
Congress saw how some monopolies still survived despite the
previous act so they created this act to patch up the holes in the
last law.
Even though this law was great at getting rid of monopolies at
the time, it still has room for improvements.

Final Round
Everything proceeds as normal...
Tally up the total of your profits

Whoever has the most money WINS!

Exit Ticket
How did the Anti-Monopoly game try to
simulate antitrust laws?
OR
Write about your industry and role + explain
how you got affected financially.

Helpful Links
http://www.investopedia.com/articles/04/040704.asp
http://www.investopedia.com/terms/a/antitrust.asp
http://www.investopedia.com/terms/s/sherman-antiturst-act
.asp
http://www.investopedia.com/terms/c/clayton-antitrust-act.a
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