You have been contracted by a competitor of SBC to conduct some background research on SBC. Specifically, you have been asked to research, compare, and explain the similarities and differences of the breakup of the AT&T/Bell System antitrust problems that occurred in the 1980s to the recently similar problems with SBC/Ameritech. Add to this, the pending acquisition of ATT by SBC.
Using the Internet, and your course materials, find websites that offer this information and answer the following questions.
Explain the difference between a monopoly and an oligopoly, the welfare effects of monopoly, cost advantages that create monopolies, government actions that create monopolies, and government actions that reduce market power.
SBC and ATT are planning to merge. Apply the information from part one of the assignment and explain whether the newly formed company will be a monopoly or oligopoly. What will be the welfare effects, if any, of this merger? What cost advantages might be created? What actions, if any, do you think the government will take? Be sure to support your answers with specific facts.
Perloff, J. M. (2004). Microeconomics (3rd ed.). New York City, NY: Pearson Addison Wesley