Sen. Klobuchar’s Antitrust Bill Could Make Inflation Worse, Not Better
Despite what you may have heard, current antitrust bills will not address inflation. Sen. Klobuchar’s American Innovation and Choice Online Act (AICOA), which is set for a markup tomorrow, could make inflation worse by creating inefficiencies and raising the price of low cost and free digital services.
In fact, inflation has remained low within the digital sector, highlighting the efficiency of online goods and services.
Here’s what to read to get up to speed:
1. 75% of economists surveyed believe that antitrust intervention would not successfully reduce inflation over the next year and 67% believed that market power is not a significant factor for inflation today, according to a new survey released by the Chicago Booth Initiative on Global Markets
7. Antitrust reformers in Washington are too focused on corporate size and outdated ideas that punish lower prices and embrace higher prices for their preferred cartel, explain FTC Commissioner Noah Joshua Phillips and Former Commissioner Josh D. Wright
Here’s what economists said when asked if “A significant factor behind today’s higher US inflation is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices in order to increase their profit margins.”
— MIT Professor David Autor: “I don’t see the logic: U.S. markets have been concentrating for decades but high inflation is < one year old.”
— Stanford Professor Darrell Duffie: “To agree, one must also be able to explain why inflation has changed recently.”
— Chicago Professor Austan Goolsbee: “Margins are up but not by enough to explain inflation.”
— Stanford Professor Robert Hall: “The proposition is an elementary confusion of levels and changes–market power causes high prices, not rising prices.”
Here’s what economists said when asked whether “Antitrust interventions could successfully reduce US inflation over the next 12 months.”
— Stanford Professor Robert Hall: “Many interventions are on behalf of high-cost disappointed rivals, so the interventions tend to raise prices.”
— Harvard Professor Eric Maskin: “As I already said, I don’t think market power is the problem here.”
— Yale Professor Larry Samuelson: “Antitrust intervention is warranted in many markets, but again it is not clear this will reduce the rate of inflation.”
Read more about how these antitrust bills could make inflation worse here.