Since the 1970s, America’s antitrust policy regime has been weakening and market power has been on the rise. High market concentration—in which few firms compete in a given market—is one indicator of market power. From 1985 to 2017, the number of mergers completed annually rose from 2,308 to 15,361 (IMAA 2017).
Recently, policymakers, academics, and journalists have questioned whether the ongoing merger wave, and lax antitrust enforcement more generally, is indeed contributing to rising concentration, and in turn, whether concentration really portends a market power crisis in the economy. In “The United States has a Market Concentration Problem“, we review the estimates of market concentration that have been conducted in a number of industries since 2000 as part of merger retrospectives and other empirical investigations. The result of that survey is clear: Market concentration in the U.S. economy is high, according to the thresholds adopted by the antitrust agencies themselves in the Horizontal Merger Guidelines.
Given the sparsity of studies that document market concentration in a given sector and in antitrust markets within that sector, there is indeed insufficient evidence to conclude that concentration in antitrust markets is rising. But the antitrust enforcement agencies themselves are in the best position to investigate that question, and so we hope they will do so—rather than publicly criticize outside attempts to shed light on the issue. The start of any policy to rectify the economy’s market power problem must be a recognition by antitrust enforcers that it exists.