On March 12, 2012, executives and others of DENSO corporation plead guilty to “conspiracy to fix price and rig bids for heater control panels (HCPs) installed in U.S. cars”, (Leslie, 2013). Denso attempted to rig bids to fix, stabilize and maintain the prices for the heaters that were used to maintain internal temperatures in cars. The pecuniary cost and non-pecuniary cost for DENSO included $78 million criminal fine and one year of jail time for several executives. Several other corporation and individual were found to be involved in the case and were also fined. Yazaki Corporation paid a $470 million criminal fine and Furukawa Electric Co. Ltd. pleaded guilty and was sentenced to pay a $200 million fine. This ruling also resulted in the DENSO stock falling by 1.4 percent in Tokyo trading.
You can google the case for more information. Based on your findings to the questions listed above, write a report with a 2-3 page essay format in APA style (use the APA template in Doc Sharing), using correct economic terms covered in the discussions.
1. Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.
2. Given your research and findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? Be sure to provide real world examples of where this may be the case to strengthen your position.
3. Provide at least one example of a case where having a monopoly or oligopoly may actually benefit the society.
Key concepts to include in your paper include the following.
• Monopoly Market Structure
• Oligopoly Market Structure
• Barriers to Entry Into the Market
• Natural Monopoly
• Government Monopoly
• Downward Sloping Demand Curve
• Economies of Scale
• Price Fixing
• Collusion
• Monopoly Pricing
• Price Maker
• Market Power
• Economic Profits
• Imperfect Competition
• Rent-Seeking Behavior
• X-Inefficiency
• Deadweight Loss to Society
• Marginal Cost
• Marginal Revenue
• Antitrust
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