The FTC recently asked for comments on “Competition and Consumer Protection in the 21st Century.”
PPI submitted two excerpts from a forthcoming paper, “Taking Competition Policy Seriously: Macro Indicators for Regulators.” Here is a summary of the first excerpt, the introduction:
Recent work has linked increased concentration to poor macroeconomic outcomes. In this spirit, this paper describes a set of quantitative market and labor indicators that can help competition regulators identify those sectors that are showing signs of impeding growth, overcharging customers, or underpaying workers. Conversely, these same indicators can be used to identify sectors that are exerting a positive influence on growth, benefiting customers, and providing jobs and higher pay to workers.
The paper finds that the tech/telecom/ecommerce (TTE) sector—also known as the digital economy–has outperformed the rest of the private sector on every macroeconomic indicator. Indeed, the evidence suggests that to the degree that there are competition problems in the US economy, they are more likely to be found outside the TTE sector.
Here is a summary of the second excerpt, on Assessing Labor Market Outcomes:
The lack of real wage growth has raised the suspicion that corporations are using their market power to artificially hold down employment, pay, and labor share. In particular, the tech/telecom/ecommerce (TTE) sector has received sustained criticism for its “bigness”.
However, we find that the TTE sector has generated significantly faster hours growth and bigger real pay increases since 2007 than the rest of the private sector. We also find that labor share in the TTE sector has risen significantly since 2007, while falling in the rest of the private sector.
These results are consistent with strong competition in the labor markets associated with TTE industries. Competition regulators concerned with labor market monopsony should be looking outside the TTE sector, at industries where employment and real wage growth are weak and the labor share is falling.