Anti-trust powers

There are a variety of policy responses that might be deployed to ameliorate the five market failures. One of these responses, legal liability, has already been introduced. There are other responses that have yet to be described anti-trust powers, information provision, insurance requirements and safety regulation. These responses are shown on the vertical axis of the matrix in Table 17.1. Along the horizontal axis are the five market failures. A "X" in a cell of the matrix indicates which market failures can be ameliorated with each policy response. 

Market power by railroads can result in pricing above cost, restriction of output and a loss of consumer surplus. The level(s) of preventive effort may not be optimal, although it is unclear whether higher or lower levels of safety will result. Not surprisingly, the motivation for the deployment of anti-trust powers has usually come from dissatisfaction with the level of output rather than from safety concerns. 

The safety analyst can rightly feel somewhat "out of the loop" in these issues. Non-optimal levels of preventive effort are not the motivating force for initiation of anti-trust powers. The safety analyst cannot even say whether a more competitive atmosphere will result in more than or less than optimal safety. 

In the licensing of patents in the plastics field, generally there are certain practices which ought to be observed to avoid difficulties. For example, a licensee should not exercise veto power over who else should be licensed by the patent owner. This is considered a bad practice under our anti-trust laws. 

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