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Chapter 12 or 25. Government & Product Markets: Pre-Class & In-Class Activities Packet Name/I.D. Number: Section: Date: Part 2. Matching: Match the Key terms in Column "A" with the definitions in Column "B" by writing the block (upper) case letter of your choice under column "A" and match the definitions in column "B" with the meanings or examples or real world applications in column "C" by writing the small (lower) case letter of your choice under column "B". Column "A" Column "B" Column "C" 1. Antitrust Law A. A merger between companies in the same industry but a. Regulation that promotes the general public's welfare rather than at different stages of the production process. the interests of well-organized stakeholders. 2. Trust B. A merger between firms that are selling similar b. Laws that regulates the conduct and organization of businesses, generally products in the same market. to promote fair competition for the benefit of consumers. 3. Herfindahl C. A good whose value increases as the expected number C. A type of merger characterized by business consolidation that occurs of units sold increases. between firms that operate in the same space, often as competitors offering the Index (HI) D. The situation when a product or technology becomes same good or service to efficiently utilize economies of scale & the standard and is difficult or impossible to dislodge as increase market share. Example, the merger of HP and Compaq. 4. Horizontal Merger the standard. d. A large grouping of business interests with significant market power. E. The time period between when a natural monopoly's e. A situation that makes a customer dependent on a vendor for products and 5. Vertical Merger costs change and when the regulatory agency adjusts services, unable to use another vendor without substantial switching costs. prices for it. Example, the more a society adopts a certain technology, the more F. A combination of firms that come together to act as a unlikely users are to switch. 6. Conglomerate monopolist f. Regulation rests on the premise that all individuals, including public Merger G. An index that measures the degree of concentration in servants, are driven by self-interest. an industry, equal to the sum of the squares of the market g. A time lag in implementation, for example, a period of time between a 7. Network Good shares of each firm in the industry. utility's request for new rates hikes and the granting of the rates by utility H. Legislation passed for the stated purpose of controlling commissions. 8. Lock-In Effect monopoly power & preserving and promoting competition n. A good whose value to one consumer increases the more that other I. A theory holding that regulators are seeking to do-and consumers use the good. Example, Facebook or Match.com. 9. Regulatory Lag will do through regulation-what is in their best interest I. A type of merger that occurs between companies where one buys or sells (specifically to enhance their power and the size and something from or to the other, the goal of which is improving a company's budget of their regulatory agencies). efficiency or reducing costs by combining them under one ownership. 10. Capture Theory J. A merger between companies in different industries. Example, the 1996 merger of Time Warner Inc. and the Turner of Regulation K. A theory holding that no matter what the motive is for Corporation of CNN. the initial regulation & the establishment of the regulatory J. Regulation holds that government regulations often end up serving the 11. Public Interest agency, eventually the agency will be captured regulated firms rather than the tax payers. Theory of Regulation (controlled) by the special interests of the industry being K. A type of merger formed to become a large corporation that owns regulated. companies in different industries. Example: Buffet's Berksher Hatway Co. 12. Public Choice L. A theory holding that regulators are seeking to do-and I. A measure of market concentration by squaring the market share of each Theory of Regulation will do through regulation-what is in the best interest of firm competing in a market and then summing the resulting numbers. It can the public or society at large. range from close to zero (Perfect competition) to 10,000 (Pure Monopoly). 3