Market Power and Inequality: The Antitrust Counterrevolution and its Discontents

One underexplored theme in the debate around economic inequality is the role of monopoly and oligopoly power. Despite the relative lack of attention to this topic, there is sound reason to believe that pervasive market power in the economy has contributed to the high level of economic inequality in the United States today. Given the general affluence of shareholders and executives relative to consumers — as well as the power dynamics within large companies — we can expect market power to have significant regressive distributional effects. Monopoly and oligopoly pricing, in general, transfers wealth from the ordinary many to the elite few. Case studies of anticompetitive practices and non-competitive market structures in several key industries illustrate how large firms have come to dominate the U.S. economy.

Additionally, monopolistic and oligopolistic companies translate their economic power into political influence, often successfully pushing for laws and regulations that further entrench their position and transfer wealth upwards. The prevalence of market power in the economy today was not inevitable. Instead, it is the product of an intellectual and political shift in the 1980s that dramatically reoriented and narrowed the goals of antitrust law. Importantly, this antitrust counterrevolution can be reversed. We present a vision of antitrust that accords with what Congress intended in enacting “this comprehensive charter of economic liberty” and offer specific policy prescriptions.