Antitrust and Wealth Inequality

In recent years, progressive public intellectuals and prominent scholars have asserted that monopoly power lies at the root of wealth inequality and that increases in antitrust enforcement are necessary to stem its rising tide. This claim is misguided. Exercises of market power have complex, crosscutting effects that undermine the generality of the monopoly regressivity claim. Contrary to what the regressivity critics assume, wealthy shareholders and senior corporate executives do not capture the preponderance of monopoly rents. Such profits are broadly shared within and dissipated outside the firm. Further, many of the subjects of antitrust law are middle-class professionals, sole proprietors, or small business owners who extract rents from households above them in the income distribution. On the consumer side, the monopoly regressivity claim is confounded by the fact that large swaths of overcharged goods and services are purchased by government buyers or third-party healthcare payers, who pass on the incidence of the overcharge progressively, or by other corporate buyers who absorb a share of the overcharge. Even as to household spending, exercises of monopoly power may have progressive wealth redistribution effects to the extent that market power facilitates progressive price discrimination. Finally, antitrust law sometimes stymies private efforts to redistribute income, further casting doubt on the generality of the monopoly regressivity claim