Which of the following is considered the most controversial aspect of antitrust regulation?

• A. Determining when a firm's market power harms consumer welfare
• B. Allowing natural monopolies to operate without oversight
• C. Setting price ceilings for monopolies
• D. Mandating firms to break up into smaller companies regardless of efficiency

Answer: (A)

Verified step by step guidance

1. Understand the purpose of antitrust regulation, which is primarily to promote competition and protect consumer welfare by preventing firms from abusing market power.
2. Recognize that one key challenge in antitrust regulation is identifying when a firm's market power actually harms consumer welfare, as not all market power leads to negative outcomes.
3. Consider why allowing natural monopolies to operate without oversight is less controversial: natural monopolies often require regulation rather than antitrust intervention because breaking them up can be inefficient.
4. Note that setting price ceilings for monopolies is a regulatory tool but is generally less controversial than the fundamental question of defining harmful market power.
5. Understand that mandating firms to break up regardless of efficiency is controversial but less central than the debate over when market power truly harms consumers, which is the core issue in antitrust policy.