The Sherman act outlawed restraints on trade as well as monopolization of industries or goods .
To understand antitrust laws we must understand what a monopoly exactly means. The dictionary meaning states that a Monopoly is economic situation in which only a single seller or producer supplies a commodity or a service. For a monopoly to be effective, there must be no practical substitutes for the product or service sold, and no serious threat of the entry of a competitor into the market. This enables the seller to control the price. Economists have developed a complicated body of theory to explain why the behavior of a monopoly firm differs from that of a competitive firm. A monopoly company, Deals with two issues: a set of demand conditions for the good or service it provides; and a set of cost conditions that regulate how much it has to pay to suppliers of the resources and labor needed to produce its product. Every business firm must adjust its production in order to maximize profit, this is the difference between the revenue it receives from its sales and the costs it gains in producing the amount sold. …
