Question

Why is it in the interest of consumers to enforce antitrust laws? (Your answer should include...

Why is it in the interest of consumers to enforce antitrust laws? (Your answer should include how competition helps increase consumer surplus.)

Homework Answers

Answer #1

Antitrust laws are meant to prevent the formation of monopoly and the extraction of consumer surplus by the producers. These regulate the monopoly practices such as charging prices much higher than the marginal cost etc.

Now, due to antutrust laws, firms behave less in a monopolistic way and the competition rises. Due to this, monopolist is unable to charge much higher prices or indulge in price discrimination to extract consumer surplus.

Since the consumer is able to retain some part or whole of consumer surplus as compared to the monopoly situation. This is why antitrust laws are in the interest of the consumer.

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