Case against Monopolies-1630 (Queen’s grant of Playing Card Importation Monopoly)
- Merchantile economy controlled by the King. Predominant form of market structure. Parliament enacted a prohibition against the importation of gaming cards. Queen granted to Darcy the exclusive right to import playing cards. Allen argued that this grant was unlawful because it conflicted with Parliament.
- Court struck down the grant claiming that it was contrary to Parliament. More importantly they also found that the grant of the exclusive right to import these cards was contrary to the common law because (it was a monopoly):
- Because it led to higher prices (modern economic theory affirms this)
- Goods would be of inferior quality
- It would lead to unemployment
- Parliament act was to protect jobs from foreign competition.
- Arguments against Parliament and court’s point of view-
o One argument is that if you forbid foreign companies to sell their goods in our country, then they won’t let us sell our goods in their countries.
o Adam Smith “comparative advantage”, If each nation is allowed to freely trade without antitrust regulation, then each nation would specialize in its advantages. I.e. these may result from barriers to entry for automobiles, geography, etc.