Editing Perfect competition (section)

=== Government intervention ===
Often, governments will try to intervene in uncompetitive markets to make them more competitive. [[Competition law|Antitrust]] (US) or competition (elsewhere) laws were created to prevent powerful firms from using their economic power to artificially create the barriers to entry they need to protect their economic profits.<ref name="MicroTheory" /><ref name="IntermediateMicro" /><ref name="IndustrialOrg" /> This includes the use of [[predatory pricing]] toward smaller competitors.<ref name="Essentials" /><ref name="IndustrialOrg" /><ref name="EconDictionary"/> For example, in the United States, [[Microsoft Corporation]] was initially convicted of breaking Anti-Trust Law and engaging in anti-competitive behavior in order to form one such barrier in ''[[United States v. Microsoft]]''; after a successful appeal on technical grounds, Microsoft agreed to a settlement with the [[United States Department of Justice|Department of Justice]] in which they were faced with stringent oversight procedures and explicit requirements<ref name="MSCourtSettlement">[https://www.justice.gov/atr/cases/f200400/200457.pdf "United States of America, Plaintiff, v. Microsoft Corporation, Defendant", Final Judgement], Civil Action No. 98-1232, November 12, 2002.</ref> designed to prevent this predatory behaviour. With lower barriers, new firms can enter the market again, making the long run equilibrium more like that of a competitive industry, with no economic profit for firms.

[[File:Imperfect competition after regulation.svg|thumb|right|In a regulated industry, the government examines firms' marginal cost structure and allows them to charge a price that is no greater than this marginal cost. This does not necessarily ensure zero Economic profit for the firm, but eliminates a [[monopoly profit|"Pure Monopoly" Profit]].|222x222px]]

If a government feels it is impractical to have a competitive market&nbsp;– such as in the case of a [[natural monopoly]]&nbsp;– it will sometimes try to regulate the existing uncompetitive market by controlling the price firms charge for their product.<ref name="MicroTheory" /><ref name="IntermediateMicro" /> For example, the old [[AT&T Corporation|AT&T]] (regulated) monopoly, which existed before the courts [[United States v. AT&T (1982)|ordered its breakup]], had to get government approval to raise its prices. The government examined the monopoly's costs to determine whether the monopoly should be able raise its price, and could reject the monopoly's application for a higher price if the cost did not justify it. Although a regulated firm will not have an economic profit as large as it would in an unregulated situation, it can still make profits well above a competitive firm in a truly competitive market.<ref name="IntermediateMicro" />