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He quotes Robert Barro :. The NCAA is impressive partly because its limitations on scholarships and other payments to athletes boost the profitability of college sports programs. But even more impressive is the NCAA's ability to maintain the moral high ground. For example, many college basketball players come from poor families and are not sufficiently talented to make it to the National Basketball Assn.
Absent the NCAA, such a student would be able to amass significant cash during a college career. With the NCAA in charge, this student remains poor. Nevertheless, the athletic association has managed to convince most people that the evildoers are the schools that violate the rules by attempting to pay athletes rather than the cartel enforcers who keep the student-athletes from getting paid.
In curling, one reason the World Curling Tour has emerged was that many curlers were disappointed with the amount of money they could earn from curling in tournaments organized by the CCA. But there are four major barriers to this competition: the Brier, the Scott, the right to go to the Worlds, and the Winter Olympics, all controlled by the CCA. If the WCT offered big enough prize money and appearance fees, those tournaments would disappear in the matter of just a few years.
The plaintiffs hope Judge Wilken will stick to the law and leave other justifications for the current state of big time college sports at the courtroom door. On Tuesday, Roger Noll, an emeritus economics professor at Stanford, took the stand for a second straight day.
In other words, does the NCAA behave like a cartel? Cartels violate antitrust laws in the United States, which is why the case is being tried under the Sherman Antitrust Act. The plaintiffs contend that the price for names, images and likenesses has been set at zero. They do not go anywhere else. If the players sought and received compensation, they would be subject to NCAA punishments and possibly forbidden from playing for their school.
The NCAA says its rules maintain a level playing field and ensure the well being of its athletes. The plaintiffs argue that the rules victimize players, particularly in the case of Division I football and basketball players, the two sports that generate significant television revenues. Judge Wilken must decide the case by weighing the balance between the pro-competitive benefits the NCAA touts — that the rules are made for a reason and athletes, schools, and sports fans get a better experience because of it — and the anti-competitive effects that the plaintiffs say such rules present.
Patent and Trademark Office, as well as the U. Copyright Office. A patent gives the inventor the exclusive legal right to make, use, or sell the invention for a limited time; in the United States, exclusive patent rights last for 20 years.
Roughly 1. A firm can renew a trademark over and over again, as long as it remains in active use. A copyright , according to the U. Copyright protection ordinarily lasts for the life of the author plus 70 years.
Roughly speaking, patent law covers inventions and copyright protects books, songs, and art. But in certain areas, like the invention of new software, it has been unclear whether patent or copyright protection should apply. There is also a body of law known as trade secrets. Even if a company does not have a patent on an invention, competing firms are not allowed to steal their secrets.
One famous trade secret is the formula for Coca-Cola, which is not protected under copyright or patent law, but is simply kept secret by the company. Taken together, this combination of patents, trademarks, copyrights, and trade secret law is called intellectual property , because it implies ownership over an idea, concept, or image, not a physical piece of property like a house or a car.
Countries around the world have enacted laws to protect intellectual property, although the time periods and exact provisions of such laws vary across countries. There are ongoing negotiations, both through the World Intellectual Property Organization WIPO and through international treaties, to bring greater harmony to the intellectual property laws of different countries to determine the extent to which patents and copyrights in one country will be respected in other countries.
Government limitations on competition used to be even more common in the United States. From the s to the s, one set of federal regulations limited which destinations airlines could choose to fly to and what fares they could charge; another set of regulations limited the interest rates that banks could pay to depositors; yet another specified what trucking firms could charge customers.
What products are considered utilities depends, in part, on the available technology. Fifty years ago, local and long distance telephone service was provided over wires. It did not make much sense to have multiple companies building multiple systems of wiring across towns and across the country.
The same thing happened to local service, especially in recent years, with the growth in cellular phone systems. The combination of improvements in production technologies and a general sense that the markets could provide services adequately led to a wave of deregulation , starting in the late s and continuing into the s.
This wave eliminated or reduced government restrictions on the firms that could enter, the prices that could be charged, and the quantities that could be produced in many industries, including telecommunications, airlines, trucking, banking, and electricity.
Around the world, from Europe to Latin America to Africa and Asia, many governments continue to control and limit competition in what those governments perceive to be key industries, including airlines, banks, steel companies, oil companies, and telephone companies.
Visit this website for examples of some pretty bizarre patents. Businesses have developed a number of schemes for creating barriers to entry by deterring potential competitors from entering the market. One method is known as predatory pricing , in which a firm uses the threat of sharp price cuts to discourage competition.
Predatory pricing is a violation of U. Consider a large airline that provides most of the flights between two particular cities. A new, small start-up airline decides to offer service between these two cities. The large airline immediately slashes prices on this route to the bone, so that the new entrant cannot make any money.
After the new entrant has gone out of business, the incumbent firm can raise prices again. After this pattern is repeated once or twice, potential new entrants may decide that it is not wise to try to compete. Small airlines often accuse larger airlines of predatory pricing: in the early s, for example, ValuJet accused Delta of predatory pricing, Frontier accused United, and Reno Air accused Northwest. In , the Justice Department ruled against American Express and Mastercard for imposing restrictions on retailers who encouraged customers to use lower swipe fees on credit transactions.
In some cases, large advertising budgets can also act as a way of discouraging the competition. If the only way to launch a successful new national cola drink is to spend more than the promotional budgets of Coca-Cola and Pepsi Cola, not too many companies will try. A firmly established brand name can be difficult to dislodge. Table 1 lists the barriers to entry that have been discussed here. This list is not exhaustive, since firms have proved to be highly creative in inventing business practices that discourage competition.
When barriers to entry exist, perfect competition is no longer a reasonable description of how an industry works. When barriers to entry are high enough, monopoly can result. Barriers to entry prevent or discourage competitors from entering the market. These barriers include: economies of scale that lead to natural monopoly; control of a physical resource; legal restrictions on competition; patent, trademark and copyright protection; and practices to intimidate the competition like predatory pricing.
Intellectual property refers to legally guaranteed ownership of an idea, rather than a physical item. The laws that protect intellectual property include patents, copyrights, trademarks, and trade secrets.
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