Question

Suppose that a business has developed a very high quality product and operates more efficiently in producing that product than any other potential competitor. As a consequence, at present it is the only seller of this product, for which there are few close substitutes. Is this firm in violation of U.S. antitrust laws? Explain.

Short answer

This company is not breaking the Sherman Antitrust Act or any other antitrust laws in the United States.

Step-by-step solution

Introduction.

Antitrust laws, also known as competition act, are laws implemented by the US government to protect consumers from unfair business practices. They ensure that level playing field exists in an open market economy.

Given data.

Antitrust rules are not broken by a company that operates efficiently and effectively. If market domination is achieved through better operational operations and increased cost efficiency, the firm's conduct cannot be classified as monopolistic.

Explanation.

Using cost-effective technology, a company can lower the market price of its products. Other companies in the industry find it impossible to compete with this efficient company, and finally quit.