Antitrust and Inequality: The Problem of Super-Firms

Abstract

Increasing concern about economic inequality has coincided with an unsettling ascendancy of some large, technologically-integrated super-firms, which have grabbed large market shares in multiple markets, and cast doubt upon the future viability of a wide range of businesses, many of which have been important local and regional employers. It is thus unsurprising that these two trends have knocked together in public discourse, and that antitrust law been proposed as one way of helping to remedy economic inequality. This essay notes that antitrust law is generally a poor fit for reducing economic inequality, but that one aspect is worthy of note: an apparent increase in the capital-labor ratio in many industries, especially in technological industries, where super-firms are predominant. An increase in the capital-labor ratio, which is putatively efficient but which may have the effect of suppressing wages, coincides with an increase in industrial concentration, suggesting that the overlap between antitrust law and economic inequality is not the null set. This essay builds on the work of many antitrust scholars in calling for a broader range of considerations in adjudicating antitrust cases. The possibility that antitrust law is playing a role in increasing the capital-labor ratio and changing the structure of economies is dangerous enough that some change in antitrust law is warranted to address foreseeable effects.