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More big market power to follow tech innovations?

When markets are dominated by a few competitors, the market power they enjoy is likely to increase, resulting in a more lopsided distribution of the economy’s bounty. There is a great deal of talk that our economy are pointed in that direction.

On NPR’s Fresh Air with Terry Gross last night, “How 5 Tech Giants Have Become More Like Governments than Companies,” with New York Times tech columnist Farhad Manjoo. What, if anything, makes what he calls “the frightful five” a big anti-competitive threat, when, say, Amazon, accounts for a modest percentage of total retail sales? (Gross also elicits from Manjoo a story about the fun of videorecording his children systematically as they grew up–an interesting twist about apparent benefits of the new internet-related technologies.)

Also, mainstream economist and pro-equality stalwart Joseph Stiglitz opines on historic trends in market power in a piece for The Nation, a progressive weekly journal that  has been around since the 19th century. A sample of his view:

There has been an increase in the market power and concentration of a few firms in industry after industry, leading to an increase in prices relative to costs (in mark-ups). This lowers the standard of living every bit as much as it lowers workers’ wages.

Stiglitz goes on later in the article,

We used to think that high profits were a sign of the successful working of the American economy, a better product, a better service. But now we know that higher profits can arise from a better way of exploiting consumers, a better way of price discrimination, extracting consumer surplus, the main effect of which is to redistribute income from consumers to our new super-wealthy.

The October 23 piece appears to be free to read online, and of course the NPR story is free. Great analysis of recent trends!

One hope against the trend is to build small-scale alternatives to the behemoths in various industries; another lies in the endless struggle to regulate the large companies in the interest of the relevant publics.


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