Posted by Bloomberg Opinion
Economists Gear Up to Challenge the Monopolies
By Noah Smith
The antitrust movement is making a comeback. Zephyr Teachout, candidate for New York state attorney general, is promising to fight monopolies. Activists such as Matt Stoller of the Open Market Institute are beginning to draw attention to the problem of concentrated market power. Think tanks like the Washington Center for Equitable Growth are starting to zero in on the issue as well. The revival of this movement is still in its infancy, and certainly hasn’t reached anything approaching the fervor of the Progressive Era a century ago. But the new antitrust crusaders are experiencing a tailwind from an unlikely ally — the economics profession.
In the past, economists have not exactly crowned themselves with glory in the fight to keep big business from getting too big. Some have made a bomb of money offering their services as consultants to companies looking to execute megamergers. The so-called Chicago School of antitrust analysis, popularized during the mid-20th century, dismissed the dangers of market concentration except in the case of explicit price-fixing or outright domination of a market by a single company. This school of thought heavily influenced the burgeoning movement to integrate law and economics, leading to looser antitrust enforcement in the 1980s and afterward.
But in the past few years, economists have become increasingly concerned with the problem of stagnating wag...