Monopoly Politics: Price Competition and Learning in the Evolution of Policy Regimes
Motivated by the rising salience of monopoly power in the United States and globally, my book project – based on my dissertation research – seeks to place this problem into historical, political, and institutional context. The book studies an underappreciated, long-term pattern: many advanced industrial states have alternated in the long run between policy regimes that consistently favor reinforcing price competition and policy regimes in support of market power and domestic monopolies. Whereas existing literature in political economy tends either to see countries as either (a) having divergent “national models” of capitalism inherited from the past or (b) as facing common external pressures to conform to the technological or market needs of the time, I explore ways in which policy regimes reshape themselves internally over time based on trade-offs inherent to competition and market power. I draw on theoretical insights from sociology, psychology, bureaucratic politics, and microeconomics to argue that policymakers are drawn to simple mental models of competition or market power that both forestall policy reconsideration and predispose leaders to see policies in simple terms of whether they promote competition or not.
Using this framing, I develop a broader theory of institutional and policy change. Applying this to the context of market power and competition, I focus on the diminishing returns that make policy regimes of competition or market power unsustainable in the long run. Despite these costs, committed officials – those who have spent time, resources, reputation, or political capital to support the existing policy regime – are generally psychologically unwilling to recognize these costs for what they are. On the other hand, through processes of bureaucratic turnover, newer officials eventually recognize these economic costs, gain influence in policy circles, and shift policy. These changes occur in several stages: (1) from a moment of political consensus in favor of competition or market power, policies are progressively added to that end, (2) the diminishing returns to these policies rise over time, but are ignored or misinterpreted by established policy leaders, (3) as the economic costs continue to rise, newer policymakers not committed to the policy regime learn about these costs and begin to persuade others, and (4) only after many policy leaders have been replaced or persuaded does policy begin to shift in the opposite direction, beginning this process again.
To test this theory, I derive detailed, micro-level observable implications and test them against original archival evidence, focusing on (a) how economic information is analyzed, (b) how government actors relate to interest groups, and (c) how policymakers adjudicate between final policy options. I use four parallel cases from the United States and France over the course of the 20th century, drawing on new archival evidence gathered through extensive field work at eight archives across both countries to show both (a) underappreciated descriptive patterns predicted by my theory and (b) detailed micro-level evidence about the policymaking process to explain these macro-level changes. In each case, I show that while other theories focusing on variables such as interest-group pressures or technological changes do not perform well when examined up-close at the micro-level. By focusing in detail on the specific policymakers responsible for these changes, and showing the internal debates among policymakers with different interpretations of economic information, this empirical research provides the historical foundations for current policy debates over antitrust and competition, and directly informs the sorts of policy changes that may be likely in years to come.
“Cartels, competition, and coalitions: the domestic drivers of international orders.” Review of International Political Economy, DOI: 10.1080/09692290.2020.1788971.
Erik Peinert (2018) “Periodizing, paths and probabilities: why critical junctures and path dependence produce causal confusion,” Review of International Political Economy, 25:1, 122-143, DOI: 10.1080/09692290.2017.1387586.
WORK IN PROGRESS
“Monopoly Politics: Price Competition, Learning, and the Evolution of Policy Regimes” (Revise and Resubmit at World Politics)
“Statism and National Champions: Political Economy and Institutional Change in Post-War France” (working paper, email for latest draft)
“Adam Smith Meets George Orwell: Markets, Antitrust, and the Politics of Language” (working paper, email for latest draft)
“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, email for latest draft)