What economic approach is embodied by the Sherman Anti-Trust Act?

The Sherman Anti-Trust Act, enacted in 1890, embodies the economic approach of regulation of competition. This landmark legislation was designed to combat anti-competitive practices and promote fair competition in the marketplace. Its primary purpose was to make illegal certain business activities that were deemed to restrain trade, such as monopolization and conspiracies to restrain commerce.

By regulating competition, the Sherman Anti-Trust Act aims to prevent companies from engaging in behaviors that would lead to unfair advantages, ensuring that multiple businesses can operate on a level playing field. This fosters innovation, protects consumers from inflated prices, and encourages a diverse marketplace.

In contrast, the other options do not align with the Act’s objectives. Promotion of monopolies goes against the fundamental goals of the Sherman Act; taxation policies are unrelated to competition regulation; and the idea of free market laissez-faire suggests minimal government intervention, which conflicts with the regulatory nature of the Act. Thus, the role of the Sherman Anti-Trust Act is clearly aligned with regulating competition to ensure a fair economic environment.