The struggle against excessive corporate power needs better standard-bearers.

For many years, I was a big proponent of the idea that increased market power was harming the U.S. economy in various ways. In the 2010s, in the economics world, circumstantial evidence began piling up that implicated increased industrial concentration as the culprit in a variety of recent negative trends. Here’s what I wrote in 2017, after reading a bunch of that evidence:

[B]asically I see the case of the Market Power Story - or any big economic story like this - as detective work. We’re collecting circumstantial evidence, and while no piece of evidence is a smoking gun, each adds to the overall picture. IF the economy were being throttled by increased market power, we’d expect to see:

1. Increased market concentration (Check! See Autor et al.)
2. Increased markups (Check! See De Loecker and Eeckhout)
3. Increased profits (Check! See Barkai)
4. Decreased investment (Check! See Gutierrez and Philippon)
5. Decreased wages in concentrated markets (Check! See Azar et al.)
6. Increased prices following mergers (Maybe! See Blonigen and Pierce)
7. Weakened antitrust enforcement (Check! See Kwoka)
8. Decreased output (Maybe not? See Ganapati)

So, as I see it, the evidence is piling up from a number of sides here.

Some of this is micro evidence, demonstrating some of the pieces of the causal chain that some economists think leads from lax antitrust to bad economic outcomes. The Azar et al. (2017) paper shows that labor market concentration hurts wages. The Blonigen and Pierce (2016) paper shows that mergers raise prices.

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