Monopoly Politics: Price Competition, Learning, and the Evolution of Policy Regimes
My book project provides a macro-historical explanation for why American and international markets are today monopolized by an ever-narrowing group of companies. Rejecting common explanations like technological change or interest-group lobbying, I show that this is merely the latest iteration in a longer pattern, whereby many industrialized countries experience long-term alternations between policy favoring market competition and policy advancing the monopoly power of incumbent firms. Using original archival evidence from ten archives in the United States and France, and borrowing insights from microeconomics, bureaucratic politics, sociology, psychology, and law, I show that policy change comes from the interaction between the costs of ongoing policy and turnover in policy circles.
Following a Schumpeterian logic, capitalist markets and growth require a balance between competition and market power. So when policy across different arenas such as antitrust, intellectual property, trade, and industrial policy push consistently for one or the other—what I call a policy regime—the policy regimes generate what I term diminishing returns over time. Pushing consistently for competition eventually leads to suppressed profits and investment, market instability, and frequent bankruptcies, as the United States experienced in the 1970s after decades of progressively stricter antitrust enforcement and trade liberalization. Pushing consistently to defend market power eventually leads to segmented markets, high prices, stifled innovation, and large profits held by firms with little incentive to reinvest them, as we see today in the U.S. after decades of weaker antitrust, the international projection of strong intellectual property rights, and trade policy that increasingly favors incumbent firms.
However, policy does not change as a function of economic problems. First arguing that policy regimes get locked in as policymakers adopt simple mental models that favor competition or market power, I show that policy regimes are locked in by committed policymakers who have invested time, reputation, or the careers into implementing one approach to policy, and who will thus never reconsider the policy regime. However, through mundane processes of turnover—hirings, firings, reorganizations, retirements—non-committed officials enter policymaking circles and reconsider the policy regime. As these officials gain more influence, policy changes. In this way, I connect the large-scale and long-term economic changes in monopoly to the on-the-ground bureaucratic politics of regulation.
Empirically, I examine four instances of policy change in the United States and France over the 20th century, leveraging tens of thousands of archival documents to show that issues of competition and market power were central in underappreciated ways. For example, I show how decades of pro-competition policy in post-war France led to a collapse in profits and investment, motivating an industrial policy of state-led mergers in the 1960s. By tracing new policy ideas or frameworks through each government, from the site of the original insight to final decision-making, I show the economic research, theories, and interests that motivated the policy discussions “in the room,” and the key considerations influencing final policy choices.
“Monopoly Politics: Price Competition, Learning, and the Evolution of Policy Regimes” (Forthcoming in World Politics)
“Cartels, competition, and coalitions: the domestic drivers of international orders.” Review of International Political Economy 28.6 (2021): 1652-1676, DOI: 10.1080/09692290.2020.1788971.
“Periodizing, paths and probabilities: why critical junctures and path dependence produce causal confusion.” Review of International Political Economy 25.1 (2018): 122-143, DOI: 10.1080/09692290.2017.1387586.
“Antitrust, Free Trade, and Fissuring,” in The Cambridge Handbook of Labor in Competition Law (Paul, Sanjukta, Shae McCrystal, and Ewan McGaughey, eds.), Cambridge University Press, 2022.
WORK IN PROGRESS
“Statism and National Champions: Political Economy and Institutional Change in Post-War France” (working paper)
“Adam Smith Meets George Orwell: Markets, Antitrust, and the Politics of Language” (working paper)
“Politics and Poison Pills: Rethinking Conceptualization and Research Design for Endogenous Institutional Change” (working paper)
“International Banking Crises and Authoritarian Sovereign Default: A Democratic Advantage?” (working paper)