Angry Economist On Monopoly And Antitrust

Another juicy tidbit is this Angry Economist posting on monopoly, competition, and antitrust. I appreciate the spirit in which he argues that antitrust laws may be unnecessary or even counterproductive:

Perhaps, you might wish to argue, antitrust laws could be used in those market segments which are difficult to enter. No. Even then a public policy is served by allowing some monopoly prices to be charged. Consider that if a market segment is hard to enter, there must be a reason for it. Perhaps much concrete needs to be poured, or many people employed all at once. If the market is hard to enter, it must be that a large investment is needed. If you were planning a society in detail, and had full control over everything, you would reasonably be reluctant to create too many firms in this type of market segment. By allowing some monopoly prices, you give potential competitors an incentive to enter the market … but not too much of one.

But we need to take this argument a step further and look at the ability of incumbents to deter entry by using the political system to raise rivals’ costs. That would be an interesting innovation at the DOJ: prosecutions based on the use of lobbying, regulation, and political relationships (i.e., rent seeking) to deter entry. That may well be in the public interest and, as one of my good friends who works at the DOJ calls it, doing the business of the American people.


One thought on “Angry Economist On Monopoly And Antitrust

  1. I agree. IMHO, this issue needs serious consideration particularly as many strategic industries (eg, military and space technology) have been undermined not by more effective foreign competition, but the obstruction of domestic competition. Also companies that control political assets are (I suspect) much more likely to flout environmental and labor law. Ie, this issue should appeal to the ideology of the primary two political groups. The reason it doesn’t is because those groups benefit from the current situation.

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