Final answer:
The government tries to protect economic competition when regulating monopolies, using tools like anti-trust laws to break up or prevent certain mergers and contracts, and relying on public disclosure to prevent market failures.
Step-by-step explanation:
The government is primarily trying to protect economic competition when it regulates trusts and monopolies. This is because monopolies can lead to higher prices and lower quality products due to the absence of competition.
Government policies like the Sherman Anti-Trust Act were designed to break up corporations that restricted trade to promote fair competition.
One of the main tools the federal government has to preserve competition among businesses is by blocking anticompetitive mergers.
This is assessed by looking at whether such mergers reduce consumer choice or create unfair advantages in the market. Furthermore, the government may also prohibit contracts that confine competition to maintain an open market.
Public disclosure is another strategy used to prevent market failures. It implies ensuring that businesses provide sufficient information to consumers and regulatory bodies, which enables better decision-making and regulation to ensure markets function properly.