Beyond the approach enforcement takes, there is likely to be more of it. Moreover, in an era of free digital services, measuring competition on price alone becomes more difficult.Ī lower bar to challenging business combinations and practices and a more active antitrust enforcement. However, a focus beyond consumer welfare makes consumer price effects less central. Since the 1980s, antitrust enforcement has focused primarily on price effects, often using quantitative empirical analysis. A number of congressional Democrats share the position, which is a basic tenet of the “New Brandeis School” of antitrust thinking.Ī greater focus on “structures and processes” rather than economic outcomes. The July 9 White House executive order focuses on the interests of producers, suppliers, and workers, not just consumers. The implications for productivity growth are ambiguous, however, with several recent studies finding a positive relationship between concentration and productivity.Ī broader focus than “consumer welfare”. However, legislative actions will likely be more incremental, and it is unclear whether bills proposing changes to the regulation of online platforms have enough support to pass.Īcademic studies suggest that an antitrust policy shift that pushes against rising market concentration will lower prices and increase the labor share of GDP. We also see the July 9 executive order-which has many industry-specific recommendations but few specific actions-as signaling a renewed executive branch focus on antitrust issues. In terms of implementation, new leadership at antitrust agencies will likely meaningfully change enforcement, and the FTC has already signaled intent to modify merger guidelines. Third, we anticipate a lower bar to challenging business combinations and practices and more active antitrust enforcement. Second, antitrust policy will likely increasingly emphasize competition for its own sake rather than economic outcomes. First, antitrust policy will likely broaden its focus to consider the interests of producers, suppliers, and workers, not just consumers. We see three potential antitrust policy changes that could push against rising concentration. We see evidence that both of these explanations-which reinforce one another-have contributed to the long-run concentration increase. Whether the rise in national concentration is problematic depends on its underlying cause, since it could reflect less active competition policy that benefits large firms and ultimately lowers output, but could also reflect increased productivity dispersion and the rise of superstar firms that have boosted growth. The rise in national concentration may not have reduced consumer welfare, however, since concentration has actually declined at the local level. The Biden administration’s competition agenda is motivated by a long-run rise in market concentration, which is partially explained by the increased prevalence of platform markets that benefit from positive network effects. In this week’s Analyst, we survey the current competitive landscape and how it might change in response to President Biden’s proposals. On July 9, President Biden issued an executive order on promoting competition in the US economy.
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