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Market Power Is Permanent, and Technological Competition Does Not Remove It

Contrary to the longstanding conventional wisdom, the monopoly power conferred by new technologies is neither short-lived nor is it a small price to pay for the associated benefits. Rising market power leads to all kinds of economic, social, and political problems – many of which have become all too visible in American today.

STANFORD – Economists and policymakers agree that technological improvements are crucial to economic growth. The information technology (IT) revolution of the last four decades has driven the economy forward, and very few people would want to stop it. But since the 1980s, as that revolution has taken root, the US economy has experienced a sharp rise in firms’ market power, defined predominantly as their ability to affect pricing.