Some Observations on Claims That Rising Market Power Is Responsible for U.S. Economy Ills and That Lax Antitrust Is the Villain

This paper evaluates the recent literature claiming that the U.S. economy has generally become less competitive causing the U.S. economy to perform poorly and that lax antitrust policy is one important reason for the decline in economic performance. Although there certainly are empirical facts requiring further study, I conclude that the evidence does not support calls for dramatic changes in antitrust policy.

By Dennis Carlton¹

I. INTRODUCTION

There has been an outpouring of scholarly articles in economics linking increases in market power throughout the U.S. economy to poor economic performance, often with the implication that lax antitrust is a primary cause of the increase in market power. A good deal of this literature has its origins in the macroeconomic literature, but microeconomists also have contributed. The FTC has held hearings on the topic of market power. There has also been a huge non-economic and popular literature calling for increased antitrust enforcement including, for example, breaking-up some large companies. Certain presidential platforms have focused on antitrust in a way not seen since the early 1900s. I will focus only on the economics literature in this essay. But even this literature is so vast that I cannot analyze it adequately in this short essay and instead highlight a few key observations that I have tentatively drawn from some articles in this evolving literature on increases in market power throughout the U.S. economy.² I prima