Illegal Competition

ILLEGAL COMPETITION refers to particular business practices or strategies banned by legal statutes. Ideally, legislation bans types of competition that either inhibit economic efficiency or are inherently unethical. There is a strong association between competition and economic efficiency. In contrast, monopolistic prices reduce economic efficiency by reducing the total amount traded in monopolized markets. These unrealized gains from trade represent a misallocation of scarce resources. Also, there is a transfer of income for those who buy monopolized goods at higher prices. The monopolist gains rent, the difference between the monopoly and competitive prices multiplied by the number of remaining sales. Consumers lose this income. The costs of affecting these transfers represent additional waste.

Consumers generally benefit from competition between businesses because it leads to lower prices ...

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