Market Concentration

The other side to competition is market concentration with most comments on market concentration focus on the tech giants, like Facebook, Google, Amazon, etc but there is a similar trend occurring in the more established industries, like banking, airlines, beer, pesticide, etc

Since the early 1980s, there has been a trend towards 3 or 4 competitors controlling entire markets.

"...rising market power by dominant firms has created less competition, lower investment in the real economy, lower productivity, less economic dynamism with fewer start-ups, higher prices for dominant firms, lower wages and more wealth inequality......CEOs cosy up to regulators to get the kind of rules they want and donate to get the laws they desire. Large companies get larger, while the smaller disappear, and the consumer and worker is left with no choice..."

Jonathan Tepper 2018

Some examples include the USA airline industry

"...most US airlines dominate a local hub......known as fortress hubs, where they face little competition and have a near monopoly. They have the landing slots, and are willing to engage in predatory pricing to keep out new entrants. At 40 of the hundred largest US airports, a single airline controls a majority of the market. United......dominates many of the country's largest airports. In Huston, United has a 60% market share, in Newark 51%, in Washington and Dallas 43%, in San Francisco 38% and in Chicago 31%...... Delta has 80% market share in Atlanta and 77% in Philadelphia, while in Dallas-Fort Worth it has 77%..."

Jonathan Tepper 2018

Examples of other highly concentrated industries include

"...Two corporations control 90% of the beer Americans drink; 5 banks control half the nation's banking assets and, after 2 mergers this year, 3 companies will control 70% of the world's pesticide market..."

Jonathan Tepper 2018

Also, outdated laws are ill-equipped to deal with extreme-winner-take-all dynamics in the tech industry, ie

"...Google completely dominates Internet search with an almost 90% market share, Facebook has almost 80% share of social networks. Both have a duopoly in advertising with no credible competition or regulation. Amazon is crushing retailers and faces conflict-of-interest as both the dominant e-commerce seller and the leading online platform of third-party sellers. It can determine what products can and cannot sell on its platform, and it competes with every customer that encounters success. Apple's iPhone and Google's Android completely control the mobile app market in a duopoly, and determine whether businesses can reach their customers and on what terms. Existing laws were not even written with digital platforms in mind......Economic and political power is becoming concentrated in the hands of distant monopolists...... income and wealth inequality have increased as companies have captured more and more of the economic pie..."

Jonathan Tepper 2018

Search For Answers

designed by: bluetinweb

We use cookies to provide you with a better service.
By continuing to use our site, you are agreeing to the use of cookies as set in our policy. I understand