The two countries have set up a joint working group that would identify subjects of cooperation in the energy sector, including ways to rein in global oil prices. The group, set up a month ago, will be co-chaired by a joint secretary in the oil ministry and his Chinese counterpart.Monopsony power confronts monopoly power to squeeze out rent extraction.
China and India, second- and third-largest oil consumers, respectively, have been meaning to form a joint front for more than a decade to assert their weight in the oil market, dominated by a producers’ cartel, OPEC....
That idea, that the market ensures that only the most efficient prosper, is a central message of neoliberal ideology, and it has held UK and US governments under its sway since the time of Thatcher and Reagan. But that ideology contains a large and deep internal contradiction, which applies particularly to large firms like Carillion. To see what that contraction is, we need to talk about ordoliberalism and Ronald Coase.Asymmetrical powers enable rent extraction.
Ordoliberalism is widely known as the German version of neoliberalism. It too celebrates the benefits of the market. It, like neoliberalism, ignores many of the failures of markets that Colin Crouch eloquently outlines and which economists spend a lot of time studying. But ordoliberalism does recognise one potential problem with their market ideal which neoliberalism ignores, and that is monopoly. Crouch makes a similar distinction in talking about market-neoliberals and corporate-neoliberals.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. — The Wealth of Nations 1.10.82Freedom entails responsibility, and responsibility depends on accountability.
Economists have been sounding the alarm about this trend for a while now. John Kwoka, an economist at Northeastern University, has literally written the book on the follies of the modern age of antitrust. In a new report, he shows how much more complacent the government has gotten toward oligopolies. The government still doesn’t tend to let a single company dominate any industry, but it’s usually fine with just five or six. Kwoka traces the change in attitudes to the rise of the so-called Chicago school approach to antitrust policy:Bloomberg View
“We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” —Justice Louis BrandeisThe rise of monopoly, monopsony, oligarchy, plutonomy, and government capture, spelling the death of a moribund republic in which corruption at the top has been legalized in the name of the "free market," which supposedly is a necessary condition for democracy.
Phil Ebersole: The solution to this problem, [Elizabeth] Warren said, is simply to enforce the anti-trust laws as originally written.
The reason that they aren’t is a neoliberal philosophy of business regulation that took hold in the late 1970s, which held that the most important thing was not competition, but business efficiency. If Amazon can serve customers more efficiently that a local bookstore, then, according to this idea, there was no reason for the local bookstore to exist.
That could be true only if Amazon, Wal-Mart, Comcast and other big corporations were owned and operated by altruists, who passed along the gains in economic efficiency to customers, workers, suppliers and the local community.
But even when consolidation produces economic efficiency that benefits consumers, economic efficiency isn’t everything. Concentration of economic power means concentration of political power, which results in the kind of dysfunctional economic system we have now.…Monopoly power = monopoly rent
Beverly Mann: This movement, our movement, which began in the fall of 2011 with Occupy Wall Street, is on track to cause a political and economic earthquake.
What's so bad about a company amassing monopoly power?
When firms have such power, they charge prices that are higher than can be justified based upon the costs of production, prices that are higher than they would be if the market was more competitive. With higher prices, consumers will demand less quantity, and hence the quantity produced and consumed will be lower than it would be under a more competitive market structure.
The bottom line is that when companies have a monopoly, prices are too high and production is too low. There's an inefficient allocation of resources.
In addition, the tactics used to establish monopoly power, such as driving competitors out of business or thwarting potential entrants, can also cause considerable harm to households who own the businesses that are forced to close their doors.…
The problems with monopolies go beyond the economic effects. Many large, economically powerful companies also have considerable political influence and the ability to "capture" the political and regulatory process. This allows a powerful firm to tilt the legal and regulatory processes against any potential threat to its market power, and to bring about changes that further enhance the profits it earns.CBS Money Watch
Barry C. Lynn is a senior fellow at the New America Foundation and the author of two important books, “End of the Line” and ”Cornered,” the latter of which describes the dramatic return of monopoly to the American landscape. Both books had a big effect on me when they appeared, as did Lynn’s periodic articles in Harper’s Magazine describing the concentration of economic power in all sorts of different industries. One of the reasons his books startled me is the weird silence of virtually all our other popular economic writers on the subject. Monopoly is back, in a massive way, and yet it seems as though even liberals often have trouble talking about it. If we’re really going to do something about inequality, however, it’s time we looked this thing in the face.
Barry Lynn and I sat down and talked it over last week. What follows is an edited transcript of our conversation.…Salon
If U.S. antitrust enforcers decide to challenge the proposed $45 billion merger of Comcast Corp and Time Warner Cable Inc, it may be because of an idea with a funny-sounding name that has been gaining currency in government offices.
The idea is monopsony power, the mirror image of the better-known monopoly power but a concept that is just as old.
A monopoly is one seller with many buyers, while a monopsony (pronounced muh-NOP-suh-nee) is one buyer with many sellers. A textbook example is a milk processor that is the only option for dairy farmers to sell to, and that then forces farmers to sell for less.
In general, I don't think that we pay enough attention to the problems that are associated with market power.Economist's View
