Is Lack of Competition Strangling the U.S. Economy? (2024)

Summary.

There’s no question that most American industries have become more concentrated. Economists are trying to understand whether this is necessarily a bad thing for competition.

The short answer: It’s complicated. Innovation superstars like Google have created winner-take-most markets largely by exploiting network effects, not through predatory behavior. However, research from the wider economy (including the tech sector) uncovers classic signs of unhealthy concentration: rising profits, weak investment, and low business dynamism.

The government’s approach to antitrust violations is due for an overhaul. And regulators need to pay more attention to protecting economic vitality and consumer well-being — and less to industry lobbyists.

• DW

  David Wessel is a senior fellow in economic studies at the Brookings Institution and director of the Hutchins Center on Fiscal and Monetary Policy, which he joined after 30 years on the staff of The Wall Street Journal. He is the author of two New York Times best-sellers: In Fed We Trust: Ben Bernanke’s War on the Great Panic (2009) and Red Ink: Inside the High Stakes Politics of the Federal Budget (2012) and has shared two Pulitzer Prizes.