The Problem of Bigness: From Standard Oil to Google
Journal of Economic Perspectives
vol. 33,
no. 3, Summer 2019
(pp. 94-117)
(Complimentary)
Abstract
This article sets recent expressions of alarm about the monopoly power of technology giants such as Google and Amazon in the long history of Americans' response to big business. I argue that we cannot understand that history unless we realize that Americans have always been concerned about the political and economic dangers of bigness, not just the threat of high prices. The problem policymakers faced after the rise of Standard Oil was how to protect society against those dangers without punishing firms that grew large because they were innovative. The antitrust regime put in place in the early twentieth century managed this balancing act by focusing on large firms' conduct toward competitors and banning practices that were anticompetitive or exclusionary. Maintaining this balance was difficult, however, and it gave way over time—first to a preoccupation with market power during the post–World War II period, and then to a fixation on consumer welfare in the late twentieth century. Refocusing policy on large firms' conduct would do much to address current fears about bigness without penalizing firms whose market power comes from innovation.Citation
Lamoreaux, Naomi R. 2019. "The Problem of Bigness: From Standard Oil to Google." Journal of Economic Perspectives, 33 (3): 94-117. DOI: 10.1257/jep.33.3.94Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- G38 Corporate Finance and Governance: Government Policy and Regulation
- K21 Antitrust Law
- L25 Firm Performance: Size, Diversification, and Scope
- L41 Monopolization; Horizontal Anticompetitive Practices
- N80 Micro-Business History: General, International, or Comparative
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