Antitrust Enforcement Increases Economic Activity

nber.org

33 points·throw0101b··5 comments

So does breaking windows. But that doesn't mean it is desirable to do so. Not saying anti trust shouldn't be enforced, just that this isn't a valid argument on its own.

A monopoly can be more efficient if it passes its operational savings to customers instead of collecting profits. Unfortunately profits before all else (even long term risk mitigation) is the business outlook of this era.

Even if that happens, the type of efficiency savings typically made by monopolies can render an industry fragile. For example, standardising hardware components can produce big savings but make the industry very vulnerable to defects.

True, monopoly can more easily be satisfied with local optimization with a lock on profit while competition increases the possibility of overcoming local opt blockages.

Hmm, that's not quite what I was getting at.

By way of example, imagine a company that monopolises a certain shipping route. They might standardise the fleet by using the same model of boat as it saves maintenance costs. However, if an underlying defect is found on that boat, it can now take the entire route out of action.

A monopoly might also try to finely tune the system so that there's very little redundancy at each port. They can do this because they have a plan for what goods are going to be where for the next few months. However, the system is now extremely vulnerable to natural disasters or global events that cause dramatic shifts in supply and demand.

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