The pandemic has further underscored the dangers of an economy that depends on a few companies for essentials, exemplified by the supply chain problems we face when a small handful of corporations creates bottlenecks for a critical product. This means large corporations and their shareholders gain wealth, while consumers and workers pay the cost. In an economy without adequate competition, prices and corporate profits rise, while workers’ wages decrease. Research has also connected market power to inequality. When there is insufficient competition, dominant firms can use their market power to charge higher prices, offer decreased quality, and block potential competitors from entering the market-meaning entrepreneurs and small businesses cannot participate on a level playing field and new ideas cannot become new goods and services. There are a number of reasons for these trends towards greater concentration, including technological change, the increasing importance of “winner take all” markets, and more lenient government oversight over the last 40 years. There is evidence that in the United States, markets have become more concentrated and perhaps less competitive across a wide array of industries: four beef packers now control over 80 percent of their market, domestic air travel is now dominated by four airlines, and many Americans have only one choice of reliable broadband provider. When firms compete to attract workers, they must increase compensation and improve working conditions. Competition is critical not only in product markets, but also in labor markets. Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation. Healthy market competition is fundamental to a well-functioning U.S.
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