Big Box Stores = America's New Oligopoly

Posted by Erin

And like most things that end in "opoly" it's the consumers, who pay the price. What is an oligopoly you ask? It refers to a state of limited competition, in which a market is shared by a small number of producers, and according to David Leonhardt in The New York Times, a  new era of oligopoly might be costing you more than $5,000 a year.

In industry after industry, a few companies have grown so large that they have the power to keep prices high and wages low. The outsize growth of GAFA (Google, Apple, Facebook, Amazon) is only one example. Most Americans also have a choice between only two internet providers or four major airlines, while Home Depot and Lowe’s have displaced local hardware stores and regional pharmacies have been swallowed by national giants. There's even a NetLingo word for it: big box store.


This isn’t some natural result of globalization and technological innovation, said Thomas Philippon, an economics professor at New York University. Europe has been far better at containing the growth of these few companies, because it has been implementing market-based ideas that Americans helped pioneer. The European Union created an impressively independent competition agency that’s willing to block mergers. 

Meanwhile, U.S. regulators—pushed by lobbyists—keep finding ways to justify mergers with dubious theories about money-saving efficiencies. Broadband service in the U.S. now costs $67.69 per month, far more than in France ($31.14) or England ($39.58). The typical cellphone bill is $61.85 for 5GB of data, versus just $14.95 in France or $18.30 in Sweden. Meanwhile, capital investment stagnates. Meanwhile, the demise of the sole proprietorship was in part due to being Amazonned, yet a few years ago, Google opened it's first brick-and-mortar store in London. All this should inspire action, but clearly we have a long way to go.

- Erin Jansen, Internet Specialist, Social Psychologist, Founder of NetLingo.com
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