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jerryking : market_concentration   6

Why the US economy isn’t as competitive or free as you think
November 14, 2019 | Financial Times | by Martin Wolf.

The Great Reversal: How America Gave up on Free Markets, by Thomas Philippon, Belknap Press RRP$29.95, 368 pages

It began with a simple question: “Why on earth are US cell phone plans so expensive?” In pursuit of the answer, Thomas Philippon embarked on a detailed empirical analysis of how business actually operates in today’s America and finished up by overturning much of what almost everybody takes as read about the world’s biggest economy.

Over the past two decades, competition and competition policy have atrophied, with dire consequences......America is no longer the home of the free-market economy, competition is not more fierce there than in Europe, its regulators are not more proactive and its new crop of superstar companies not radically different from their predecessors.

Philippon's argument:
(1) US markets have become less competitive: concentration is high in many industries, leaders are entrenched, and their profit rates are excessive.
(2) this lack of competition has hurt US consumers and workers: it has led to higher prices, lower investment and lower productivity growth.
(3) contrary to common wisdom, the main explanation is political, not technological: Philippon traces the decrease in competition to increasing barriers to entry and weak antitrust enforcement, sustained by heavy lobbying and campaign contributions.”....... the US economy has seen a significant reduction in competition and a corresponding rise in monopoly and oligopoly.

What should the US want? The answers, suggests Philippon, are: free entry; regulators prepared to make mistakes when acting against monopoly; and protection of transparency, privacy and data ownership by customers. The great obstacle to action in the US is the pervasive role of money in politics. The results are the twin evils of oligopoly and oligarchy. Donald Trump is in so many ways a product of the defective capitalism described in The Great Reversal. What the US needs, instead, is another Teddy Roosevelt and his energetic trust-busting. Is that still imaginable? All believers in the virtues of competitive capitalism must hope so.
antitrust  barriers_to_entry  books  book_reviews  campaign_contributions  Citizens_United  competitiveness_of_nations  crony_capitalism  dark_money  economics  economists  entrenched_interests  EU  FAANG  free_markets  French  gun_laws  healthcare  lobbying  market_concentration  monopolies  monopsony  oligopolies  oligarchs  regulators  Theodore_Roosevelt  uncompetitive 
november 2019 by jerryking
Big Tech in hiring spree for looming antitrust battles | Financial Times
Kiran Stacey in Washington DECEMBER 23, 2018 Print this page6
Big technology and telecoms companies have embarked on a hiring spree of former antitrust officials as their industries gear up for what experts warn could be an “existential” battle over whether they should be broken up.

In the last few months, Facebook, Amazon and AT&T have all hired senior antitrust officials from the US Department of Justice as they confront a new generation of regulators who are interested in preventing concentrations of economic power......Many of the biggest US technology companies have endured a difficult year, facing allegations of not protecting customer data, failing to prevent Russian interference in American democracy and showing political bias.

In response, several have beefed up their lobbying operations in Washington as they look to engage more with politicians, having previously preferred to operate under the radar. .....Experts say the hirings reflect a growing belief that competition policy could become the next significant political battleground....The European Commission has investigated US technology companies for alleged anti-competitive behaviour. Margrethe Vestager, the European Commissioner for Competition, is bringing cases against Google and is looking into Amazon.

Such cases have been more difficult to pursue in the US, where the law is focused more on whether anti-competitive behaviour is keeping prices artificially high.

A group of younger progressive regulators and politicians have argued in recent years, however, that technology companies that give their services away for free but dominate their markets should come in for as much attention.....Rohit Chopra, a Federal Trade Commissioner in his mid-30s, for example, recently hired Lina Khan, a 29-year-old policy thinker who has argued that large technology companies can both bring prices down and be harmful to society in general.
Amazon  antitrust  AT&T  Big_Tech  competition_policy  corporate_concentration  Department_of_Justice  FAANG  Facebook  FTC  hiring  Lina_Khan  lawyers  lobbying  market_power  market_concentration  monopolies  platforms  regulation  regulators  revolving_door  under_the_radar 
december 2018 by jerryking
The Amazon-Walmart Showdown That Explains the Modern Economy - The New York Times
Neil Irwin @Neil_Irwin JUNE 16, 2017

The decision by Amazon and Walmart to compete for my grocery business — as well as for space in my closet — is a tiny battle in a war to dominate a changing global economy.

And for companies that can’t compete on price and technology, it could cost them the shirt off their backs.....[Amazon's purchase of high-end grocery chain Whole Foods places it] on a collision course with Walmart to try to be the predominant seller of pretty much everything you buy.

Each one is trying to become more like the other — Walmart by investing heavily in its technology, Amazon by opening physical bookstores and now buying physical supermarkets. But this is more than a battle between two business titans. Their rivalry sheds light on the shifting economics of nearly every major industry, replete with winner-take-all effects and huge advantages that accrue to the biggest and best-run organizations, to the detriment of upstarts and second-fiddle players.....in turn...this has more worrying implications for jobs, wages and inequality.

Amazon vs. Walmart

Both want to sell everything!!!!

Walmart is buying Bonobos, an omnichannel innovator. Its website and online customer service are excellent, and it operates stores in major cities where you can try on garments and order items to be shipped directly. Because all the actual inventory is centralized, the stores themselves can occupy minimal square footage. The acquisition helps Walmart build expertise in the very areas where it is trying to gain on Amazon.

Walmart and Amazon have had their sights on each other for years, each aiming to be the dominant seller of goods via omnichannel.

Amazon's purchase of Whole Foods helps it to understand the grocery business which has a whole different set of challenges from the types of goods that Amazon has specialized in heretofore.

A Positive Returns-to-Scale World
The apparel business has long been a highly competitive industry in which countless players could find a niche.....any shirt-maker that tried to get too big rapidly faced diminishing returns.It would have to pay more and more to lease the real estate for far-flung stores, and would have to outbid competitors to hire all the experienced shirt-makers. The expansion wouldn’t offer any meaningful cost savings and would entail a lot more headaches trying to manage it all....in the digital economy, rather than reflecting those diminishing returns to scale, show positive returns to scale: The biggest companies have a huge advantage over smaller players. That tends to tilt markets toward a handful of players or even a monopoly....The apparel industry...is moving in the direction of being like the software business (high fixed costs, zero variable costs, enormous returns to scale)..... the reason why Walmart and Amazon are so eager get into the shirt business is because retailers know that they need to figure out how to manage sophisticated supply chains connecting Southeast Asia with stores in big American cities so that they rarely run out of product. They need mobile apps and websites that offer a seamless user experience so that nothing stands between a would-be purchaser and an order....Larger companies that are good at supply chain management and technology can spread those more-or-less fixed costs around more total sales, enabling them to keep prices lower than a niche player and entrench their advantage....large companies will invest in automation/robotics...the future of clothing/apparel might be a handful of companies with the very expensive shirt-making robots---and everyone else shut out in the cold.

What It Means for the Economy

A relative few winners are taking a disproportionate share of business in a wide range of industries....in turn may help explain why the income gap has widened in recent years. How much on income inequality is driven by shifting technology — as opposed to changing corporate behavior, or loose antitrust policy — is an open debate.
increasing_returns_to_scale  winner-take-all  fixed_costs  variable_costs  Amazon  Wal-Mart  Whole_Foods  retailers  economics  Bonobos  shirts  mens'_clothing  omnichannel  apparel  digital_economy  automation  robotics  competitive_landscape  market_concentration  barbell_effect  income_inequality  antitrust  market_power  corporate_concentration  grocery  fresh_produce  supermarkets  large_companies  UX  inventory-free  global_economy 
june 2017 by jerryking
Where Have All the Black-Owned Businesses Gone? - The Atlantic
BRIAN S. FELDMAN MAY 1, 2017

The last 30 years also have brought the wholesale collapse of black-owned independent businesses and financial institutions that once anchored black communities across the country. In 1985, 60 black-owned banks were providing financial services to their communities; today, just 23 remain. In 11 states where black-owned banks had headquarters in 1994, not a single one is still in business. Of the 50 black-owned insurance companies that operated during the 1980s, today just two remain.

Over the same period, tens of thousands of black-owned retail establishments and local service companies also have disappeared, having gone out of business or been acquired by larger companies. Reflecting these developments, working-age black Americans have become far less likely to be their own boss than in the 1990s. The per-capita number of black employers, for example, declined by some 12 percent just between 1997 and 2014.......the decline in entrepreneurship and business ownership among black Americans also is cause for concern. ...market concentration has played a role in suppressing opportunity and in displacing local economies. ...........The role of market concentration in inhibiting black-owned businesses is also troubling because of the critical role that such enterprises have played in organizing and financing the struggle for civil rights in America......The decline of black-owned independent businesses traces back to many causes, but a major one that has been little noted was the decline in the enforcement of anti-monopoly and fair-trade laws beginning in the late 1970s......Bob Dickerson, the CEO of the Birmingham Business Resource Center in Alabama, says, “Had our institutions and businesses been maintained, had that money been plowed back into our communities, it could have meant a world of difference.”

The role of market concentration in driving down the number of black-owned independent businesses becomes all the more concerning when one considers some mostly forgotten history. In principles, people, and tactics, the fight for black civil rights, going back to before the Civil War, was often deeply intertwined and aligned with America’s anti-monopoly traditions......The story of how the struggle for civil rights intertwined and intersected historically with the struggle against monopoly provides a lesson for the future. It suggests a need to recognize how political independence connects with economic independence in the struggle for social justice. Without freedom from domination in one sphere, there is no freedom in the other.
African-Americans  anticompetitive_behaviour  anti-monopoly  antitrust  black-owned  business  civil_rights  collapse-anxiety  corporate_concentration  economic_clout  economic_inclusion  economic_independence  enforcement  fair-trade  Jim_Crow  market_concentration  market_power  New_Deal  political_independence  segregation  societal_collapse 
may 2017 by jerryking
Google's Turn to Quake? - WSJ.com
April 4, 2012 | WSJ | By ROBERT HAHN.

Google's Turn to Quake? IBM and Microsoft fought antitrust authorities on multiple continents, even as they lost their fleeting dominance....Antitrust policy is built on the notion that market concentration, collusion or nasty behavior toward rivals undermines efficiency by allowing producers to charge more and to block innovation. That's not a bad rule of thumb for "old economy" industries. Before Japanese auto makers broke through the barriers, Detroit charged too much, divvying up most of the surplus between workers and managers. Worse—much worse—auto industry technology and productivity stagnated, as stakeholders sheltered their pockets of privilege from the winds of change.

But high-tech industries in general, and information technology industries in particular, are an entirely different sort of beast. Market concentration and huge profits are typically a consequence of economies of scale and returns to intellectual property, not monopoly power. (It costs no more to produce 10 million copies of Microsoft Office than 10 copies.) And while the management of the current crop of winning companies may be as eager as monopolists of yore to bar the doors to rivals, rapid technological change denies them the opportunity.
Google  IBM  Microsoft  antitrust  competition  competitive_landscape  increasing_returns_to_scale  collusion  market_power  corporate_concentration  monopolies  economies_of_scale  intellectual_property  automotive_industry  productivity  winner-take-all  market_concentration  technological_change  returns_to_intellectual_property 
april 2012 by jerryking

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