Jonathan Writes “The U.S. now has many industries with only three or four competitors controlling entire markets. Since the early 1980s, market concentration has increased severely. We’ve already described the airline industry. Here are other examples:
Two corporations control 90 percent of the beer Americans drink.
Five banks control about half of the nation’s banking assets.
Many states have health insurance markets where the top two insurers have an 80 percent to 90 percent market share. For example, in Alabama one company, Blue Cross Blue Shield, has an 84 percent market share and in Hawaii it has 65 percent market share.
When it comes to high-speed Internet access, almost all markets are local monopolies; over 75 percent of households have no choice with only one provider.
Four players control the entire U.S. beef market and have carved up the country.
After two mergers this year, three companies will control 70 percent of the world’s pesticide market and 80 percent of the U.S. corn-seed market.
The list of industries with dominant players is endless. It gets even worse when you look at the world of technology. Laws are outdated to deal with the extreme winner-takes-all dynamics online. Google completely dominates internet searches with an almost 90 percent market share. Facebook has an almost 80 percent share of social networks. Both have a duopoly in advertising with no credible competition or regulation.
Amazon is crushing retailers and faces conflicts of interest as both the dominant e-commerce seller and the leading online platform for third-party sellers. It can determine what products can and cannot sell on its platform, and it competes with any customer that encounters success.
Apple’s iPhone and Google’s Android completely control the mobile app market in a duopoly, and they determine whether businesses can reach their customers and on what terms. Existing laws were not even written with digital platforms in mind.
So far, these platforms appear to be benign dictators, but they are dictators nonetheless.
Oligopoly or monopolies is a word normally associated with advanced economies and not with developing economy like India, but if you read the book The Myth of Capitalism by Jonathan Tepper ( excerpt above from Bloomberg) you will realise that OLIGOPOLY can now be applied in Indian context.
The result is going to be less job creation and shifting of pricing power from consumer to producer via price fixing
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