Photo: Yale New Haven Hospital, now part of a larger hospital group, which has raised hospital admission prices more than elsewhere in the state. Credit 禁书 网

Large firm economic and political power

Oligopolies and monopolies are important ways of obtaining income without providing a productive service.  They produce goods, a productive service. However, they receive additional income by raising prices, and their oligopoly/monopoly profits are distinguished by economists from normal profits and other expenses, which are the returns to productive activity.  There are other harmful aspects to large firms as well, pointed out in these articles.

Investigation of generic ‘cartel’ expands to 300 drugs Christopher Rowland Washington Post December 9,  2018

“What started as an antitrust lawsuit brought by states over just two drugs in 2016 has exploded into an investigation of alleged price-fixing involving at least 16 companies and 300 drugs, Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut who has been a leading force in the probe, said…’This is most likely the largest cartel in the history of the United States,’ Nielsen said. He cited the volume of drugs in the schemes, that they took place on American soil and the ‘total number of companies involved, and individuals.'”

What these medical journals don’t reveal: top doctors’ ties to industry Charles Ornstein and Katie Thomas New York Times December 8, 2018

Many doctors have failed to report that their research was supported by industry, despite being required to do so, simply hiding potential or actual conflicts of interest from the scientific community, regulators and the general public.

These next two articles describe how hospital consolidation into large chains, typically described as “saving money through the benefits of consolidation”  in fact have increased prices in the markets studied, as reduced completion makes it easier to raise prices.

When hospitals merge to save money, patients often pay more Reed Abelson New York Times November 15, 2018

The Price Ain’t Right? Hospital prices and health spending on the privately insured Zack Cooper, Stuart V. Craig, Martin Gaynor, John Van Reenen  National Bureau of Economic Research Issued December 2015, updated May 2018.

Across the West powerful firms are becoming even more powerful Patrick Foulis The Economist  November 15, 2018

This article takes a good look at the substantial role big firms play in the U.S. economy. “Some $44trn of takeovers have taken place since 1998, many aimed at creating pricing power or efficiency gains whose benefits are not passed to consumers. It has become fashionable for managers to build “moats”, or barriers to entry….. Clever firms found new ways to constrict competition. A fifth of all American workers are covered by non-compete clauses. Patents are “evergreened”. Arbitration clauses and complex contracts are used to hobble competitors. A few fund managers own big chunks of most firms. They do not conspire but they do set the tone at the top, doing little to encourage price wars.”

The heavy focus on 5G wireless means we are ignoring 68 million Americans facing high-speed cable monopolies Ernesto Falcon Electronic Frontier Foundation October 22, 2018

Gives a specific example of how telecom firms did not compete with cable companies to install fiber optic cable,  but instead are promoting wireless 5G, an inferior solution.

Be afraid of economic ‘bigness.’ Be very afraid.  Tim Wu New York Times November 15, 2018

Discusses the threat to democracy posed by large firms.  After WWII, large German firms were considered to have facilitated the rise of Fascism, and were broken up.

Economists gear up to challenge the monopolies Noah Smith Bloomberg News  September 4, 2018

Better late than never!  Describes how economists, and government, after decades of downplaying anti-trust policy, are beginning to awake to its importance.

Intellectual property: not intellectual monopoly Zia Qureshi Brookings Institution July 11, 2018

Describes problems with the current patent system, one being “A majority of patents are used not to produce commercial value, but to create defensive legal thickets that can keep potential competitors at bay.”

Look for news updates on this topic on Google News under monopoly economics.

Photo: Yale New Haven Hospital, now part of a larger hospital group, which has raised hospital admission prices more than elsewhere in the state. Credit 禁书 网

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