Welcome to DU! The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards. Join the community: Create a free account Support DU (and get rid of ads!): Become a Star Member Latest Breaking News General Discussion The DU Lounge All Forums Issue Forums Culture Forums Alliance Forums Region Forums Support Forums Help & Search

BeckyDem

(8,361 posts)
Fri Jul 28, 2023, 09:59 AM Jul 2023

How Costly Is Rising Market Power for the U.S. Economy?

Economic Brief
July 2023, No. 23-24
How Costly Is Rising Market Power for the U.S. Economy?
By Chen Yeh

We survey the recent, active debate on market power in the U.S. economy. While typical studies on market power focused on narrow industries due to data constraints, the relevance of market power for the aggregate economy was reinvigorated by a study focusing on publicly traded firms that documented a significant rise in U.S market power since the 1980s. This article is meant to provide a bird's-eye view of the (sometimes heated) discussion on market power. Furthermore, we examine the macroeconomic consequences of a rise in U.S. market power.


While economists are fully aware of the qualitative ramifications of market power, there are surprisingly few studies that try to quantify it. In this article, we survey the recent, active debate on market power and explore the implications of rising market power for the U.S. economy. We do so by first reviewing the study that documented a significant rise in U.S. market power since the 1980s. This study ignited the debate on market power, leading to many follow-up studies and criticism.

Excerpt: For an economy to achieve efficiency, it needs to be perfectly competitive. Only under this specific case are goods and services produced and sold at the lowest possible price. In the absence of perfect competition, however, resources are not allocated optimally, and consumers face higher prices due to firms exerting their market power. As a result, high levels of market power could have devastating consequences for welfare and inequality.

https://www.richmondfed.org/publications/research/economic_brief/2023/eb_23-24


( The brief is somewhat long but not boring. How greed works is systematic and pervasive. )

5 replies = new reply since forum marked as read
Highlight: NoneDon't highlight anything 5 newestHighlight 5 most recent replies
How Costly Is Rising Market Power for the U.S. Economy? (Original Post) BeckyDem Jul 2023 OP
In other words, this article is about monopolies. Could have said that before I had to read the SWBTATTReg Jul 2023 #1
Imagine that! elleng Jul 2023 #2
Yes. And we can see it happening today, w/ the so called inflation not being caused by SWBTATTReg Jul 2023 #3
Is it greed or lust for power? orthoclad Jul 2023 #5
Excerpt: Market power and monopoly power are related but not the same. BeckyDem Jul 2023 #4

SWBTATTReg

(22,520 posts)
1. In other words, this article is about monopolies. Could have said that before I had to read the
Fri Jul 28, 2023, 12:14 PM
Jul 2023

whole article.

elleng

(132,128 posts)
2. Imagine that!
Fri Jul 28, 2023, 12:28 PM
Jul 2023

'high levels of market power could have devastating consequences for welfare and inequality.'

SWBTATTReg

(22,520 posts)
3. Yes. And we can see it happening today, w/ the so called inflation not being caused by
Fri Jul 28, 2023, 12:31 PM
Jul 2023

resource constraints etc., but greed, 'hey, lets increase the prices because we can!'.

And I suspect that this is worse than in prior years being that the tax codes for the wealthy has been stripped down, thus, more dollars to the bottom line means more money in the wallets of these companies, the 1%ers.

BeckyDem

(8,361 posts)
4. Excerpt: Market power and monopoly power are related but not the same.
Fri Jul 28, 2023, 04:52 PM
Jul 2023

The Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market," 8 and monopoly power as "the power to control prices or exclude competition." 9 The Supreme Court has held that "[m]onopoly power under § 2 requires, of course, something greater than market power under § 1."10 Precisely where market power becomes so great as to constitute what the law deems to be monopoly power is largely a matter of degree rather than one of kind. Clearly, however, monopoly power requires, at a minimum, a substantial degree of market power.11 Moreover, before subjecting a firm to possible challenge under antitrust law for monopolization or attempted monopolization, the power in question is generally required to be much more than merely fleeting; that is, it must also be durable.12

https://www.justice.gov/atr/monopoly-power-and-market-power-antitrust-law

Latest Discussions»Editorials & Other Articles»How Costly Is Rising Mark...