Monopolies: A Threat to Consumers or a Political Ploy

Abstract

The United States Department of Justice recently announced an antitrust lawsuit against the search and search advertising giant, Google. Referencing anticompetitive practices that restrict competition and harm consumers, the DOJ, by attempting to break up Google’s control of the search market due to harm it is inflicting upon consumers as a result of its monopoly power, is continuing a policy of ensuring competitive markets that goes back more than a century to President Theodore Roosevelt and his crusade against trusts, and in particular, John D. Rockefeller’s Standard Oil Monopoly.

Monopolistic behavior can take many forms, but opponents of monopolies, of which there are many, share the common criticism that monopolies are toxic for the economy and commit an injustice against individual consumers. Their solution to these harmful effects includes robust regulation and providing readily available detailed information to the public demonstrating the extent to which industry in the United States is concentrated.

Unfortunately, while it is true that monopolies have the power to cause harm through the market power possessed by monopolies, it is equally true that monopolies are uniquely capable of taking actions that benefit the country, the economy, and consumers. The benefits of monopoly do not receive a lot of publicity because it’s not politically valuable and goes against the traditions of thought to which Americans have been subjected for well over a century. The fact that 10 percent of the world’s public companies generate 80 percent of all profits and the United States’ 100 largest companies have increased their share of GDP creation by 13 percentage points to 46 percent in two decades, it’s urgent to discuss monopolies more expansively and focus on the facts rather than political talking points.1

This paper will make the argument that monopolies are overregulated, which harms the economy and its consumers more so than it helps. Monopolies should be subject to less scrutiny in the U.S. economy to perform their functions more efficiently. Regulators have alternative means of guarding against the negative effects of monopoly while allowing for the positive effects.