The Equitable Economy

ESG, Corporate Governance & Future of the Firm

The system of formal and informal rules by which a company is governed. Corporate governance shapes more than just a given's company value - it dictates who controls the capital in the economy and so how this capital is being put the use. Corporate governance therefore affects and is affected by the degree of cronyism and rent-seeking in society.

Health Care

Americans spend significantly more on health care than any other country. Why? Answers to this question range from hospital monopolies to perverse incentives to opaque pricing to medical licensing to pharmaceutical firms abusing IP practices to “creeping consolidation.” Why is the US health care system so broken? And what can antirust do about it? Catch-up on our coverage of antitrust and the US health care system.

Housing

Income Inequality

Labor

Race and Gender

Antitrust and Competition

The Impact of Large Institutional Investors on Innovation Is Not as Positive as One Might Expect

Bing Guo, Dennis C. Hutschenreiter, David Pérez-Castrillo, Anna Toldrà-Simats

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.

Commentary

We Need Better Research on the Relationship Between Market Power and Productivity in the Hospital Industry

David Ennis

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.

Democracy

How Political Campaign Rhetoric Against Drug Abuse Led to Racial Discrimination in Drug Arrests

Francesco Barilari, Diego Zambiasi

In new research, Francesco Barilari and Diego Zambiasi study how President Ronald Reagan and George H.W. Bush’s rhetoric on the War on Drugs while on the campaign trail, particularly targeting crack cocaine abuse, was enough to alter policing policy. Specifically, the authors find that increased rhetoric led to an increase in arrests of Black Americans. Their study contributes to a literature on the material impact that political rhetoric can have on policing and public policy.

Antitrust and Competition

Firm Consolidations Hurt Workers, But Likely Not Because of Market Power

Sabien Dobbelaere, Grace McCormack, Daniel Prinz, Sándor Sóvágó

In new research, Sabien Dobbelaere, Grace McCormack, Daniel Prinz, and Sándor Sóvágó find that mergers negatively impact labor market outcomes. Mergers result in job losses, and the earnings of workers who lose their jobs don’t recover for several years on average. The authors find these negative consequences are more likely attributable to the restructuring of labor forces than subsequent firm market power.

Antitrust and Competition

Labor Markets Are the New Frontier for Competition Policy

Satoshi Araki, Andrea Bassanini, Andrew Green, Luca Marcolin, Cristina Volpin

Do labor markets in Europe or the United States and Canada experience more monopsony power? In a new paper published in the University of Chicago Law Review, Satoshi Araki, Andrea Bassanini, Andrew Green, Luca Marcolin, and Cristina Volpin provide comparisons of monopsony power between the two regions, documenting similar levels of concentration across labor markets despite generally stronger protections in Europe. They also discuss the effects of such concentration on employment and wages, ending with potential regulatory reforms to address these issues.

Race and Gender

Gender Stereotypes in Academic Reference Letters

Markus Eberhardt, Giovanni Facchini, Valeria Rueda

In new research, Markus Eberhardt, Giovanni Facchini, and Valeria Rueda delve into a unique database comprising 12,000 reference letters, which were written in support of more than 3,700 applicants applying for academic job positions in economics in the United Kingdom. Their analysis uncovers a pervasive disparity in the way male and female candidates are recommended. Specifically, the authors observe that women are frequently lauded for their hard work and determination, and at times less likely to be praised for their natural talent. They also show that such gender-based stereotyping hinders the progress of women economists.

ESG, Corporate Governance & Future of the Firm

Event Notes: Is Corporate ESG “Woke” Capitalism?

ProMarket writers

The Stigler Center for the Study of the Economy and the State hosted with the Rustandy Center for Social Sector Innovation, in partnership with the Financial Times, a virtual event discussing whether corporate ESG policies puts politics before shareholder and stakeholders' best interests or looks out for their long term best interests, with Marianne Bertrand, Jay Clayton and Damien Dwin. The following is a transcript of the event.

Antitrust and Competition

What the Practice of Noncompetes in Italy Says About the Current American Debate

Tito Boeri, Andrea Garnero, Lorenzo Giovanni Luisetto

American antitrust regulators have recently taken aim at noncompete clauses. They argue that noncompetes suppress labor bargaining power and thus wages. The Italian labor market differs from its American counterpart in its rigid protections for labor, but the use of noncompetes in Italy occur at about the same rate as in the United States and shows a correlation with lower wages for workers whose noncompete clauses are unjustified because their jobs require little training and do not grant access to trade secrets. The evidence from Italy suggests that better regulation of noncompetes and informing workers of their rights is justified on the whole.

ESG, Corporate Governance & Future of the Firm

Event Notes: Shareholder Democracy

ProMarket writers

The Stigler Center for the Study of the Economy and the State hosted with the Rustandy Center for Social Sector Innovation, in partnership with the Financial Times, a virtual event discussing shareholder democracy with Lisa Fairfax, Alex Thaler and Luigi Zingales. The following is a transcript of the event.

Commentary

Anti-ESG Legislation is Demonstrating the Peril of Meddling in Markets

Jennifer J. Schulp

Anti-ESG rhetoric from conservative states conflates valid financial evaluations of company and industry prospects with the ideological values of political opponents. Politicians that pass legislation preventing businesses and state agencies from working with financial services with ESG standards will only harm their constituents. Instead, states should encourage competition and variety in financial services, writes Jennifer J. Schulp.

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Latest news

Antitrust and Competition

How US Antitrust Enforcement Against Xerox Promoted Innovation by Japanese Competitors

Robin Mamrak

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

John Kwoka

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

Cyril Hédoin, Alexandre Chirat

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

Bing Guo, Dennis C. Hutschenreiter, David Pérez-Castrillo, Anna Toldrà-Simats

Antitrust and Competition

The FTC Needs To Focus Arguments on Technological Transitions After High-Profile Losses

Joshua Gray, Cristian Santesteban

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

David Ennis

Antitrust and Competition

Debating the Draft Merger Guidelines: Transcript

ProMarket writers

On September 7, the Stigler Center hosted a webinar to discuss the draft merger guidelines. What follows is a slightly edited transcript of the event.

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The Equitable Economy

ESG, Corporate Governance & Future of the Firm

Health Care

Housing

Income Inequality

Labor

Race and Gender

Latest news

How US Antitrust Enforcement Against Xerox Promoted Innovation by Japanese Competitors

Revising the Merger Guidelines To Return Antitrust to a Sound Economic and Legal Foundation

How Anthony Downs’s Analysis Explains Rational Voters’ Preferences for Populism

The Impact of Large Institutional Investors on Innovation Is Not as Positive as One Might Expect

The FTC Needs To Focus Arguments on Technological Transitions After High-Profile Losses

We Need Better Research on the Relationship Between Market Power and Productivity in the Hospital Industry

Debating the Draft Merger Guidelines: Transcript

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