Question

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how do antitrust laws encourage competition?

Answer 1

Antitrust laws are used to theoretically protect consumers from businesses that seek to distort the market through unfair practices. Antitrust laws prevent the creation of cartels or groups of companies that work in conjunction to raise the costs of goods above the market value that would occur with competition. The also restrict the mergers and acquisitions of companies that would restrict or inhibit competition if a company were to get too large. And finally these laws prevent the misuse or creation of monopoly power by a single or a few large firms to distort the market and prevent competition and pricing that is deemed to be a fair market price to consumers.