MICROECONOMICS PRINCIPLES WITH ETHICS

MODULE 16: Ethics of Market Competition

Textbook Reading:

Presentation Slides:

Additional Useful Information:

How and Why Companies become Monopolies
This web-page from Investopedia offers some additional detail on the topic of this module. Also check out some of the related links on this page for further related information.

Monopolization Defined
This website produced by the US Federal Trade Commission offers a discussion of the topic vis-a-vis the federal antitrust laws. Some of the related links on this page provide further related information.

Competition Is for Losers
This article by Peter Thiel argues that the best way to make a lot of money in business is NOT to enter a competitive industry (like opening a restaurant) but rather to acquire some sort of monopoly advantage.

Market Power is Permanent
(Dec 2023) This article by Mordechai Kurz explains why there is considerable monopoly power among today's high technology firms and how they hold onto that market power. He concludes by arguing that free market competition is not sufficient to eliminate that market power.

Monopoly's New Era
In this article, Nobel laureate Joseph Stiglitz discusses the rise of monopolization and its impact on economic inequality.

Lina Khan Brings a Chance to Reshape Antitrust Policy
(June 2021) This article from the Financial times discusses the appointment by President Biden of Lina Khan as the Chair of the US Federal Trade Commission and the ramifications for the enforcement of US antitrust policy.

Executive Order on Promoting Competition in the American Economy
(July 9, 2021) This executive order signed by President Biden outlines some of the concerns about rising monopolization in the US economy and commits the administration to more thoroughly enforce existing laws designed to promote competition.

The muddled economics behind curbs on Airbnb
This article discusses the competitive effects of Airbnb in the hotel industry and the calls for new legislation to help correct problems.

Occupational licensing blunts competition and boosts inequality - How to rig an economy
This article provides some details about the effects of occupational licensing.

OVERVIEW

In this module we discuss the methods businesses use when faced with competition from other firms. There are numerous methods to secure monopoly power to varying degrees. From the differentiation of a firm's product, something that is largely innocuous, to the merger with other firms selling similar products, which in the extreme could result in a pure monopoly. Firms also sometimes use the power of government to create regulations that help secure monopoly power. In most of these cases, firms actions are shown to have the reverse effects of competition, that is, a reduction in product supply, an increase in the price, and an increase in firm profits, while undermining consumer welfare and overall market efficiency. The ethics of such behavior is also assessed.

VIDEO LECTURE

Business Responses to Competition - 87 minutes