The Great Reversal
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market power: and assessing competition, 25; versus demand elasticity, 26; and welfare, 27–30; concentration and rise in, 45–48; concentration hypotheses and rise in, 48–51; persistence of market shares over time and rise in, 51–53; profits of US firms and rise in, 51–53; profit margins and payouts and rise in, 54–58; China shock and rise in, 58–60; versus efficiency in merger regulation, 88–90
market share: of Walmart, 32; persistence of, over time, 51–53. See also concentration
market value: investment and, 67–69; of Apple, 245; of internet giants, 252
markup, 118, 120–122
Marquis, M., 133
Matvos, Gregor, 220
Maytag, 92
McAfee, Andrew, 258
McCain–Feingold Act (2002), 182, 186
McDonald’s, 115–116, 117, 282
McGrath, Conor, 161
McKinley, William, 159
McLaughlin, P. A., 95
McMillan, Robert, 271
Mediaset, 199
Merger Guidelines, 87–88
merger reviews, 86–88; market power versus efficiency, 88–90; in recent years, 91; of internet giants, 273–275
mergers and acquisitions, 84–85; “killer acquisitions,” 82; foreign competition and dubious domestic, 92–93; enforcement in Europe, 146; and future of Europe’s free markets, 147–149; in health care, 231–232; limiting, by internet giants, 273–275
Meyer, Bruce, 224
Michaely, Roni, 47, 54–56
Microsoft: business model of, 244; regulation of, 259–260. See also internet giants
military dominance, 152
Miller, Merton, 207
minimum wage, impact on retail prices, 33–34
Miranda, Javier, 81
mistakes, tolerance for, 4, 295–296
Mitterrand, François, 128
mobile telecommunications: costs in US versus Europe, 6; deregulation of, 30–31. See also internet service; telecommunications industry
Molyneux, Philip, 216
money market mutual fund industry, 218–219
Mongey, Simon, 281
Monnet, Jean, 124, 130, 131–132, 134, 142
monopoly power, 279–280. See also antitrust; competition
monopoly rents, 108
monopsony, 279–280; defined, 108; and labor market concentration, 280–282; and restricted contracts, 282; and occupational licensing, 282–283; and rise of club economy, 283–284; dangers of, 284–285
Monti, Mario, 203
Montialoux, Claire, 34
morbidity, 229
mortality, 229–230
mortgages, government involvement in, 237–238
Morton, Fiona, 275
Much Ado about Nothing hypothesis, 48, 49, 53, 56
Mullainathan, Sendhil, 220
Mulvaney, Mick, 189
MV / Emp ratio, 254–255
Naidu, Suresh, 282
National Association of Attorneys General (NAAG), 195
national competition authorities (NCAs), 133
national concentration indexes, 35–37
net investment, 64–66
net present value (NPV), 67–69
network economics, 265–268
network effects / externalities, 265–267
Newberry, Truman, 181
Noeth, Markus, 220
Nokia, 50
nonnormal trade relations (non-NTR) tariff, 58–59
occupational licensing, 282–283
OECD, 127, 136, 145
Olley, Steven, 3
Olson, Mancur, viii, 23
Omarova, Saule, 269
omitted variable bias, 180
online gambling, 174
online privacy, 271–273, 275–276, 277–278, 296
opacity, in health care, 233
opioid epidemic, 234–236
OxyContin, 235–236
Pacula, Rosalie Liccardo, 235–236
Page, Larry, 256
Pai, Ajit, 200
Pain Care Forum, 235
Pakes, Ariel, 3
Patterson, Christina, 48, 50
PBS, 153–154
per-capita economic growth, 14–15, 100–102
permanent normal trade relations (PNTR), granted to China, 59
Pharmaceutical Research and Manufacturers of America (PhRMA), 198
Pierce, Justin R., 91
Pigou, Arthur Cecil, 95
Piketty, Thomas, 16
Pinkham, Richard, 139
PMR indexes, 125
Polis, Jared, 259
political action committees (PACs), 164–165, 177, 181–182, 184, 187. See also leadership PACs; super PACs
political economy, comparison of US and European, 151–152, 164–166. See also campaign finance contributions; lobbying
poverty, 224
Powell, David, 235–236
Powell, Michael, 200
Power, Patrick, 236
predatory pricing, 43–44
Price, David J., 284
price coherence, 269–271
price comparisons, 111–112; complexity of, 112–114; and price increases, 118–123
price discrimination, 269–271
price hikes, 7–8
price indexes, 41–42
prices: competition’s impact on, 18; as indicator of competition, 25; evolution of retail trade services relative to general consumer price index, 33; minimum wage’s impact on retail, 33–34; on Amazon, 39–40; quality-adjusted, 40, 41–42; loss leader pricing, 43; predatory pricing, 43–44; impact of higher, 114; increases in US versus Europe, 118–122; in United States, 122–123; of health care, 228–229
privacy, 271–273, 275–276, 277–278, 296
productivity, 76–79; and price comparisons, 119; of US health care, 229–231
product market convergence, in Europe, 144
product market reform, in Europe, 143
product market regulation (PMR) indexes, 125
profit margins: of Walmart, 32–33; of Amazon, 43; and rise of market power, 54–58; in Europe, 103–106; of internet giants, 249–252
profit payouts, and rise of market power, 54–58
profit rates, in US and EU, 106
profits: as indicator of competition, 25; business investment as low relative to, 63–65; in Europe, 103–106; and deregulation of US airlines, 137; and corporate income taxes, 264
Proust, Marcel, 249
Public Broadcasting Service (PBS), 153–154
public choice theory on entry decline, 95–96
public interest theory on entry decline, 95–96
purchasing power parity (PPP), 14, 114–115, 117
q theory, 67–71, 93
Quidsi, 43
Rabelais, François, 135
Raffarin, Jean-Pierre, 147
Rannazzisi, Joseph T., 235
RegData, 95
regulatory capture, 233–234
Reinhart, Carmen, 241
relevant market, 38
remittances, 217
Renkin, Tobias, 34
rents, 20–21, 23. See also monopoly rents
rent seeking, 156–157, 160–161
replacement cost, 64–65, 67–69
replacement of market shares, 52
Reserve Primary Money Market Fund, 219
reshuffling of market shares, 52
resources, competition and limited, 22–23
restricted contracts: in health care, 232–233; and monopsony power, 282
Reuter, Jonathan, 220
reverse causality, 171–173, 180
revolving doors, 200–202
Reynolds, Kara, 195
Richter, Brian, 155, 164
Rise of Superstar Firms hypothesis, 48, 49, 53, 61, 62, 72, 76–79, 97
Robinson, Joan, 87, 207
robo-advising, 220
Rogers, Will, 176
Rogoff, Kenneth, 241
Roosevelt, Theodore, 159–160, 181
Rosenthal, Howard, 29–30
Ro
usseau, Peter L., x
Saez, Emmanuel, 16
Saffi, Felipe E., 163
scale, economies of, 265, 266, 267–268
Scharfstein, David, 214–215
Schinkel, Maarten Pieter, 147
Schoar, Antoinette, 220
Schreyer, Paul, 1
Schuman, Robert, 130
Schuman Declaration of 1950, 130
Schuman Plan, 130, 142
Sears, 34–35
Second Industrial Revolution, 15
securities industry, 215
Semanko, Nicholas A., 163
Sen, Amartya, 223
Seru, Amit, 200, 220
service quality, competition’s impact on, 19
Sessions, Jeff, 198
Shapiro, Carl, 37–38
Shcherbakov, Oleksandr, 19
Sherman Act (1890), 86, 131
Shin, Minchul, 163
Shleifer, Andrei, 127
Shum, Matthew, 19
Sichel, Daniel, 73–74
Siegenthaler, Michael, 34
Single Market, 143, 145, 289
skepticism, vii–viii
skewness, 166–170, 178–180
Smith, Adam, 279
Smith–Connally Act, 182
Smoot-Hawley Tariff Act (1930), 58–59
Snyder, James M. Jr., 189, 191, 202
soft money, in campaign finance contributions, 183
software investment, 73
Sondermann, David, 170
Song, Jae, 284
SpeechNow.org, 185–186, 187
SpeechNow.org v. FEC (2010), 185–186
Srinivasan, Dina, 275–276, 278
Stack Overflow, 268
Starcher, John Jr., 231
starvation, 223
state aid, 134–135
state politics, in US, 195–197
steady state, 80
Steinbaum, Marshall, 280
Stern, Scott, 82
Stigler, George, 95
stock market, “unprecedented” performance of, x–xi
Strahan, Philip E., 216
Stratmann, Thomas, 182, 190, 191, 195
Stresemann, Gustav, 129
Strickler, Laura, 235
structure-performance-conduct paradigm, 87
Stulz, René, 84
Sullivan, James, 224
supermarkets, regulation of French, 147
super PACs, 185–186, 187–189, 198–199
supply and demand, and endogeneity bias, 158
Suri, Siddarth, 282
Syverson, Chad, 31, 34
Tabakovic, Haris, 201
Tabarrok, A., 95
Taft–Hartley Act, 182
tangible investment, 73, 74
Taska, Bledi, 280
tax breaks, 134–135
Tax Cuts and Jobs Act (TCJA, 2018), 264
taxes: lobbying for lower, 163; paid by internet giants, 262–264
taxis, 19
technology: interaction of regulation and, 4; and US per-capita economic growth rate, 15–16; as problem-solver, 277. See also financial technology (fintech); information technologies; internet giants
Telecommunications Act (1996), 3
telecommunications industry: deregulation of, 3–4, 30–31, 140–141; lobbying by, 170. See also internet service; mobile telecommunications
Tillis, Thom, 178
Tillman Act (1907), 181
time series evidence, 121
Tirole, Jean, 269
Tobin, James, 67
Tobin’s q, 67–71, 93
Tørsløv, T., 135
total factor productivity (TFP) growth, 15, 31–32
trade: international, 24; and dubious domestic mergers, 92–93
trade associations, 183–184
trade policy, 290–291
Trade Talks, 92, 290–291
transparency, 296
Treaty of Rome (1957), 132
Trebbi, Francesco, 162–163, 165–166, 190, 199, 200
Trump, Donald, 92, 160–161, 180, 221
Tufano, Peter, 220
turnover of market shares, 52
Uber, 19
uncertainty, in policy decisions, 4
United Healthcare, 234
United States: labor share in, 107–108; labor shares in euro area and, 109; Europe as contrast to, 109–110; price increases in, 118–123; as champion of free markets, 124; differences between antitrust frameworks in Europe and, 133, 134; similarities between antitrust frameworks in Europe and, 133; deregulation in, 135–136; deregulation of airline industry in, 137, 138, 139–140; cartel enforcement in, 146–147; comparison of political economies of Europe and, 151–152, 164–166; distribution of large lobbying firms in EU and, 169–170; state politics in, 195–197; life expectancy in, 224; internet giants and economic growth in, 256–258; challenges facing, 296–297. See also health care; price comparisons
United States v. AT&T (1974), 3
unit labor costs (ULC), 119, 120
US Consumer Price Index (CPI), 41–42
US dollars, 152
Vanden Bergh, Richard, 170
Van Reenen, John, 48, 50
vendor-managed inventory (VMI) system, 34
Verizon, 6
Vestager, Margrethe, 134–135, 148
Wachter, Till von, 284
wages, labor market concentration’s impact on, 281. See also Balassa-Samuelson effect
Walmart, 31–35, 216, 233
washing machines, 92–93
Waugh, Michael E., 22
wealth management industry, 215
Weinstein, David, 50, 59
Welch, W. P., 190
welfare, 27–30
WhatsApp, 274
Wheeler, Tom, 200
Whirlpool, 92
White, Lawrence, 87
Wier, L., 135
Wilson, Charles, 240, 252
Wilson, Woodrow, 129
Wollmann, Thomas, 201
workers’ flows, 200–201
World War I, 128–129
World War II, 129
young firms, 82–83
Zingales, Luigi, 6, 202
Zuckerberg, Mark, 244
Zucman, Gabriel, 135, 263
Zweig, Stefan, x