Regional Income Disparities, Monopoly & Finance

Many of the most prosperous places in the U.S. are hotbeds of technology and also the home bases of companies which exercise monopoly power across much larger territories – nationally, or even globally. This paper makes four arguments about regional income disparities. First, monopoly, and the market for new prospective monopolies amplifies agglomeration economies, making locations invincible and inimitable. Second, the taxes imposed by the monopoly firms on a wide range of economic activity, together with the restrictions they are able to impose on the dissemination and use of technology, further inhibit local economic development in other places. Third, financialization – the power of the financial sector over both firms which are receiving financing and firms which are paying cash out – serves to feed these spatially concentrated monopolies at the expense of other places and industries. Finally, we conclude that the most efforts at local economic development would be best furthered by breaking up the concentrated economic power of technology and finance.