Monopoly, Oligopoly, Market Power and AntiTrust
Capitalists unendingly seek monopoly, oligopoly, monopsony and oligopsony as routes to the highest possible profits. All are inefficient according to ordinary microeconomics. This is a huge, measurable cost. Capitalists cannot self-regulate this problem away: government must.
- Natural Monopolies (5 links)
- Libertarians like to deny the existence of natural monopolies in roads, sewers, and many other services (like Google search) that have increasing returns to scale. Or they make crazy arguments that they should not be produced or regulated by government.
- Digital Monopolies (6 links)
- Microsoft, Apple, Amazon, Alphabet (Google) and Facebook are the 5 largest companies in the USA. Why? Because they are all natural monopolies due to network externalities. Twitter is also a monopoly. These monopolies have the unaccountable private power of spying on and banning users arbitrarily from this important cultural infrastructure.
- State monopoly on violence (3 links)
- This is a bad misdirection from Max Weber. The state has a monopoly on JUDGING what violence is LEGAL. This allows the state to permit and regulate violence by lesser governments and private parties, as well as making some of its own violence legal. We deliberately delegate much violence to the public state, because private parties are too partial when unregulated.
- Algorithmic Prison (15 links)
- The algorithmic prison idea is that big data allows business and government to deny us loans, jobs, right to travel, etc. without our knowing why or being able to contest and change the data. This also makes us very vulnerable to dirty tricks.
- Antimonopoly Is as Old as the Republic [More...]
- Should the U.S. enforce more explicit restrictions on monopolies, or can innovation and democracy alone mitigate the pervasive effects of monopoly power? A panel of historians and economists at the recent Stigler Center conference on concentration in America discussed the historical evolution of this debate.
- Credit Cards (1 link)
- Credit cards assess a hidden tax called the Interchange Fee. It is the money withheld from the merchant by banks and credit card companies to pay for the privilege of using a credit card in the transaction. This tax also frequently falls on cash customers, because credit card contracts with merchants generally provide that merchants cannot reveal the tax with a surcharge for using a credit card. Merchants can offer cash discounts, but most do not, charging the same prices, and so cash customers subsidize credit card fees. This is VERY big business, due to oligopoly in the industry.
- Free markets killed capitalism: Ayn Rand, Ronald Reagan, Wal-Mart, Amazon and the 1 percent’s sick triumph over us all [More...]
- "The American economy is more concentrated today than it’s been in more than a century, since the days of the plutocrats. Pretty much every sector of the economy is dominated by a few Goliaths, sometimes a single dominant corporation. "
- Grocery Goliaths: How Food Monopolies Impact Customers [More...]
- "This growing consolidation of the food supply is severe at every step of the food chain, from farm to fork. And it impacts not only farmers and food manufacturers, but also consumers in the form of reduced consumer choices and higher grocery prices."
- How Market Power Leads to Corporate Political Influence [More...]
- "Neoclassical economic theory assumes that firms have no power to influence the rules of the game... This is true only in competitive product markets. When firms have market power, they will seek and obtain political influence and vice versa."
- Imperfect Competition, Legitimate at Last [More...]
- A short history of monopolistic competition (industrial organization) studies, which has resulted recently in the Nobel prize in economics for Jean Tirole. Chicago Economics takes a drubbing.
- Labor Market Monopsony: Trends, Consequences and Policy Responses [More...]
- "This issue brief explains how monopsony, or wage- setting power, in the labor market can reduce wages, employment, and overall welfare, and describes various sources of monopsony power." "But in the presence of anti-competitive firm behavior or labor market frictions that limit competition, policy must take a multipronged approach to promoting wage and job growth."
- Liberals, you must reclaim Adam Smith [More...]
- David Brin denounces modern libertarians and their selective citation of Adam Smith. Brin calls for progressive reforms to bring capitalism back to Smithian competition.
- Liberty! What Fallacies Are Committed in Thy Name! [More...]
- Cosma Shalizi points out that libertarian-style arguments about eliminating antitrust have severe empirical difficulties: ie. price fixing is rampant in the global marketplace.
- Market economics means more than just supply and demand [More...]
- A simple and clear explanation of Jean Tirole's Nobel prize winning work on market dominance.
- Market Power (13 links)
- In a market exchange, there is producer surplus and consumer surplus. Market power is a market failure that occurs when producers can raise prices above the marginal costs to capture more of the surplus. Usually through monopoly, oligopoly or other bottleneck techniques. Libertarians often deny the existence of market power.
- Monopolies Are Worse Than We Thought [More...]
- Market concentration increases prices, limits market size, and makes the economy less efficient. And new evidence indicates that it hurts workers and increases inequality.
- Monopolies May Be Worse for Workers Than for Consumers [More...]
- There isn't much evidence that they raise prices, but they do seem to hold down wages.
- Monopsony in Motion (book)
- Analyzes labor markets from the real-world perspective that employers have significant market (or monopsony) power over their workers because of transaction costs of changing jobs. "The book addresses the theoretical implications of monopsony and presents a wealth of empirical evidence."
- Peter Thiel on the Virtues of Monopoly [More...]
- "Fair enough, Thiel. But what about consumers? That model we learned shows us that they’re worse off under monopoly. And what about the deadweight loss triangle–don’t forget about that ugly thing! "
- Pharmacy Benefit Managers (1 link)
- Middlemen who manage prescription drug benefits for health plans. They are unregulated and oligopolistic, taking a very large cut of revenue from pharmacies and customers. Because their methods are not transparent, drug companies, insurance companies and pharmacies don't even know how much they are paying these middle men.
- Political Determinants of Competition in the Mobile Telecommunication Industry [More...]
- "We show that the way a government designs the rules of the game has an impact on concentration, competition, and prices. Pro-competition regulation reduces prices, but does not hurt quality of services or investments. More democratic governments tend to design more competitive rules, while more politically connected operators are able to distort the rules in their favor, restricting competition. Government intervention has large redistributive effects: U.S. consumers would gain $65bn a year if U.S. mobile service prices were in line with German ones and $44bn if they were in line with Danish ones."
- Robber Baron Recessions [More...]
- The virtual end of antitrust enforcement which began under Ronald Reagan seems to have brought about secular stagnation. "For we aren’t just living in a second Gilded Age, we’re also living in a second robber baron era."
- Standard Oil, Monopoly and Predatory Pricing (3 links)
- For decades libertarians have relied on the egregious revisionist history of Standard Oil by John McGee of the Chicago School to declare predatory pricing and monopoly rare and impractical. This claim has been thoroughly refuted by legal and economic research, both empirical and theoretical. Now it is up to the courts to catch up with academia.
- T-Mobile Turns an Industry on Its Ear [More...]
- In 2011, officials at the Federal Communications Commission and the Justice Department moved to block AT&T’s proposed $39 billion acquisition of T-Mobile on antitrust grounds. That led to some very serious price-cutting and unbundling competition.
- Teddy Roosevelt Wouldn't Understand the EU's Antitrust Fine Against Google [More...]
- Because it is based on stiffling innovation, rather than prices.
- The Light Bulb Cartel and Planned Obsolescence [More...]
- "The average life of a standard reference lightbulb produced in dozens of Phoebus members’ factories dropped by a third between 1926 and fiscal year 1933–34, from 1,800 hours to just 1,205 hours."
- The Myth of Capitalism: Monopolies and the Death of Competition (book)
- A few very powerful companies dominate key industries that affect our daily lives. Digital monopolies like Google, Facebook and Amazon act as gatekeepers to the digital world. Amazon is capturing almost all online shopping dollars. We have the illusion of choice, but for most critical decisions, we have only one or two companies, when it comes to high speed Internet, health insurance, medical care, mortgage title insurance, social networks, Internet searches, or even consumer goods like toothpaste.
- Thomas Jefferson Feared an Aristocracy of Corporations [More...]
- "The author of the Declaration of Independence warned against the threat to democracy posed by big banks and big corporations. Too bad the Supreme Court doesn't respect the original intent of the founders."
- Unfriendly Skies [More...]
- "It’s time to admit that airline deregulation has failed passengers, workers -- and economic efficiency."
Though free market theorists are reluctant to admit it, capitalists are not fond of free markets, since open and fair competition forces them to invest in product development while they cut their prices. Monopoly and the destruction of competition is the ideal condition for the entrepreneur, and he will strive to achieve it unless restrained not by conscience but by an outside agency enforcing “anti-trust” laws.
Ernest Partridge, "A Dim View of Libertarianism, Part VII -- Some Concluding Questions"
[T]he information revolution in economics that Hayek kicked off well over a half century ago, ended up pointing to a larger public role both in rectifying market failures and in addressing the problem of unaccountable power exercised by employers over employees.
Sam Bowles, "How Hayek’s Evolutionary Theory Disproves His Politics"
The invisible hand of the market makes a very good pickpocket.
The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.
Adam Smith, "The Wealth of Nations", last sentences in conclusion of Book 1.