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 dissertation studies an underappreciated, long-term pattern: advanced industrial states tend to alternate 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 history or (b) as all 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. Showing that many states do indeed sustain policy regimes in favor of one or the other for extended periods, I draw on evidence and insights from sociology, psychology, and economics 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 endogenous institutional change. Applying this to the context of market power and competition, I argue that it is the psychological proclivity to refuse reconsidering policy alternatives that explains both the endurance of one-sided policy regimes and their eventual collapse based on internal contradictions. In particular, despite all of the impediments to learning, non-committed policymakers – those who have not spent time, resources, reputation, or political capital to support the existing policy regime – do eventually recognize these economic costs to 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 costs of 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.
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
“Cartels, Competition, and Coalitions: the New Deal and Shifting Policy Orders” (under review)
“Ententes and National Champions in Post-War France”
“Liberalization, Protectionism, and Pervasive Market Regulation: Cartels, Trade, and Competition in Practice”
“Financial Crises, Diversionary Conflict, and Authoritarian Regimes: A 200-year Assessment” (with Tim Turnbull)
“Culture and Technology as Ambiguous Variables” (with Sanne Verschuren)