Document Type

Article

Publication Date

3-25-2019

Abstract

Antitrust policy promises to be an important issue in the 2020 presidential election, and for good reason. Market power measured by price-cost margins has been on the rise since the 1980s. Presidential candidate Senator Elizabeth Warren has two proposals directed at large tech platforms. One would designate large platform markets such as Amazon “platform utilities,” and prohibit them from selling their own merchandise on the platform in competition with other retailers. The other proposes more aggressive enforcement against large platform acquisitions of smaller companies.

This paper concludes that the first proposal is anticompetitive, leading to reduced output and higher prices at the expense of consumers and labor, and for the benefit of traditional trademarked brands. The second proposal has some merit but needs more careful definition. As stated, it would condemn mergers likely to result in lower prices and higher output, mainly for the benefit of firms dedicated to obsolete technologies or business methods.

Publication Citation

The Regulatory Review (March 2019).

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