You have been retained as an economics consultant for a law firm to provide the economics background to their Anti-Trust cases. Thus you will want to provide convincing evidence for the following, and as well make sure you refute what the "other side" is going to say. In all three cases below, you want to illustrate an industrial structure that would produce the "evidence" cited by the government, but where there is no intent to either monopolize the market nor to restrict consumer choices (or produce deadweight losses). Point out any evidence to choose which structure (yours or the government's) might be correct.

Case one is that a firm is being sued because its price has been the same as another firm's price for several years. The Government is arguing that having prices be the same, and having firms change their prices at similar times by similar amounts prove that the two firms must be colluding. First, show how the government could be correct. Then, illustrate at least one industrial structure where two firms would exhibit the same pricing behavior but not be colluding- even implicitly.

Case two is that your client's firm has had a price above another firm's price in the same industry for several years. The government is arguing that this proves your client has a monopoly position, because only when it is a dominant firm in an industry could it maintain a price above another firm's price for an essentially similar, although not identical, product. Your client firm claims their version of the product is more expensive.

Case 3 is that your client's firm has had a price below that of a firm selling a similar, though not identical, product for several years. The Government is arguing that your client is therefore pursuing a predatory pricing strategy, with the goal to drive the competitor out of business so that your client can pursue a monopolistic strategy of having high prices. Your client claims they have an upward sloping average cost curve.

Please! anything will help. My final is tomorrow and I'm stuck on this review question.