Rent seeking
When one group tries to obtain privileges from the government to secure profits beyond those available under well-functioning markets. Importantly, such privileges-seeking does not create new value in the economy. It merely transfers value from one group to another, while wasting physical, human, and social capital. “The existence of an opportunity to obtain monopoly profits will attract resources into efforts to obtain monopolies, and the opportunity costs of those resources are social costs of monopoly too… Theft provides an instructive analogy. The transfer of wealth from victim to thief involves no artificial limitation of output,' but it does not follow that the social cost of theft is zero. The opportunity for such transfers draws resources into thieving and in turn into protection against theft, and the opportunity costs of the resources consumed are social costs of theft.” Richard Posner - The Social Costs of Monopoly and Regulation (1975)
Rent seeking
ProMarket Interview: Robert J. Shiller on Competition, Deception and Rent-Seeking
Yale economist and Nobel Prize Laureate Robert J. Shiller explains why competition in itself does not always weed out deception and rent-seeking.
“Our free-market system...
Rent seeking
Are We All Rent-Seeking Investors?
Has The Economist, the commentary magazine of the capitalistic global elite, embraced the corporate-bashing trend taken by many populist politicians in the U.S., U.K.,...
Rent seeking
Putting the Client Last: A Former Investment Banker Explains How Clients are Being Systemically Sucker-Punched
“It is when our clients are the most fragile that we make the most money.” Part two in a series of columns by anonymous...
Rent seeking
The True Price of Reduced Competition in Health Care: Hospital Monopolies Drastically Drive Up Prices
New study reveals the potential damage of the merger frenzy that has accelerated in recent years.
Since the Affordable Care Act was signed into law,...
Rent seeking
Is Fraud in the Financial Sector a “Bug” or a “Feature”?
Study: 7 percent of financial advisers have misconduct records - 44 percent are hired within a year.
A new paper by Mark Egan, Gregor Matvos...
Rent seeking
Study: Politically Connected Private Equity Firms Hire More, Fire Less in Order to Help Incumbent Politicians
Private equity firms are not often associated with job gains. A new paper by Mara Faccio and Scott Hsu reveals the political dynamics that lead...
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Antitrust and Competition
Revising Guideline 6 With Evidence To Establish a Structural Inference for Input Foreclosure
Vertical merger law lacks the structural presumption of horizontal merger law, which shifts the burden from the government to the merging parties to provide evidence that a merger will not produce anticompetitive effects when it is known that the merger will substantially increase market concentration. To improve Guideline 6 of the draft Merger Guidelines concerning vertical foreclosure, Steven Salop develops a three-factor criteria with which the government antitrust agencies can show an analogous structural “inference” that shifts the burden of evidence to the merging parties.
Antitrust and Competition
How US Antitrust Enforcement Against Xerox Promoted Innovation by Japanese Competitors
Xerox invented modern copier technology and was so successful that its brand name became a verb. In 1972, U.S. antitrust authorities charged Xerox with monopolization and eventually ordered the licensing of all its copier-related patents. As new research by Robin Mamrak shows, this antitrust intervention promoted subsequent innovation in the copier industry, but only among Japanese competitors. Nevertheless, their innovations benefited U.S. consumers.
Antitrust and Competition
Revising the Merger Guidelines To Return Antitrust to a Sound Economic and Legal Foundation
The draft Merger Guidelines largely replace the consumer welfare standard of the Chicago School with the lessening of competition principle found in the 1914 Clayton Act. This shift would enable the Federal Trade Commission and Department of Justice Antitrust Division to utilize the full extent of modern economics to respond to rising concentration and its harmful effects, writes John Kwoka.
Economic History
How Anthony Downs’s Analysis Explains Rational Voters’ Preferences for Populism
In new research, Cyril Hédoin and Alexandre Chirat use the rational-choice theory of economist Anthony Downs to explain how populism rationally arises to challenge established institutions of liberal democracy.
Antitrust and Competition
The Impact of Large Institutional Investors on Innovation Is Not as Positive as One Might Expect
In a new paper, Bing Guo, Dennis C. Hutschenreiter, David Pérez-Castrillo, and Anna Toldrà-Simats study how large institutional investors impact firm innovation. The authors find that large institutional investors encourage internal research and development but discourage firm acquisitions that would add patents and knowledge to their firms’ portfolios, hampering overall innovation.
Antitrust and Competition
The FTC Needs To Focus Arguments on Technological Transitions After High-Profile Losses
Joshua Gray and Cristian Santesteban argue that the Federal Trade Commission's focus in Meta-Within and Microsoft-Activision on narrow markets like VR fitness apps and consoles missed the boat on the real competition issue: the threat to future competition in nascent markets like VR platforms and cloud gaming.
Commentary
We Need Better Research on the Relationship Between Market Power and Productivity in the Hospital Industry
Antitrust debates have largely ignored questions about the relationship between market power and productivity, and scholars have provided little guidance on the issue due to data limitations. However, data is plentiful on the hospital industry for both market power and operating costs and productivity, and researchers need to take advantage, writes David Ennis.
