Joan Robinson, Efficiencies from Concentration, and the Evolution of Competition Policy

British economist Joan Robinson’s profound contributions to industrial economics still resonate across a wide range of subject matter. Her work is particularly relevant in the context of heightened concerns over whether product market concentration in developed Western economies has, in recent decades, resulted in both increased market power and increased buyer power – and whether this, in turn, has led to a rise in inequality and a decline in the share of value accruing to labor. At the same time, many competition agencies around the world remain skeptical about the potential for mergers and acquisitions (“M&A”) to result in substantive cost reducing efficiencies. In this article, I highlight, through the lens of Robinson’s writing, the tensions between these two stances, and reflect on how Robinson’s analysis could influence future competition policy. My hope is that, in the important debate about the future evolution of competition policy, proponents on both sides can ultimately agree that we must collectively ensure worldviews underlying any changes are, at a minimum, consistent.

By Peter Davis1

I. INTRODUCTION

The Economics of Imperfect Competition by Joan Robinson is one of those books that any professional competition economist really should read.2 Robinson was a great British economist who wrote on a wide range of topics, spending a significant amount of time in the early part of her career thinking about competition economics in particul