The importance of protecting competition in the era of oligopolies

The importance of protecting competition in the era of oligopolies

Large companies seem to have found a solution to overcome the crisis: become bigger and control greater market shares. As shown by a study by the Anglo-American company Refinitiv [1], the overall value of mergers and acquisitions concluded in the world between January and April 2021 is equal to 1,770 billion dollars: a historical record , for a value growing by 124% compared to the previous year, driven in particular by the USA. But this trend is only the most recent phase of an orientation. Which already in the last years preceding the pandemic, has acquired increasingly global features. From food trade to media, water, energy, the web and banking services, most sectors are now dominated by a handful of multinationals.

What economists ask is whether this necessarily represents

A disadvantage for the competitiveness of the markets. The one who seems to have clear ideas on this matter is Joe Biden, who publicly announced: “Capitalism without competition is not capitalism. It’s exploitation.” In fact, last July 9, the president of the United States signed an executive order – that is, a provision that Iran Phone Number List directs the work of government agencies – to promote greater competition in the American economy. These are 72 initiatives designed to reduce the trend of corporate consolidation. Combat anti-competitive practices and offer concrete benefits to American consumers, workers and small businesses. What are the main causes behind mergers? One of the triggering reasons is the idea that the economy of scale is the key to competitiveness: this would consist in increasing.

The scale of production by decreasing the unit cost of

The product as the main medium-long term objective. Secondly, mergers and acquisitions increase the market and bargaining power of the company towards producers, suppliers and subcontractors. For large companies, in particular, the solution therefore involves increasing size: bigger, stronger. But for UK WhatsApp Number List consumers, for the economy, for markets and for those same companies, are these always virtuous strategies? What is the social cost of the ever-widening diffusion of oligopolies? The multiplication of dominant positions. Determines an unequal distribution of productivity increases, lower wage growth, an increase in prices. A slowdown in the diffusion of technical progress and, consequently, lower growth. In fact, in less competitive markets, large players are not incentivized to invest to produce competitive advantages over their competitors . On the contrary, the presence of such giants can slow down. Competitors’ access to the market by deciding to purchase them.