MONOPOLY CAPITAL AND ITS INSULATION FROM COUNTERVAILING POWER: AMERICAN CAPITALISM REVISTED

Countervailing Power and Upstream Innovation

We challenge the view that the presence of powerful buyers stifles suppliers’ incentives to innovate. Following Katz (1987), we model countervailing (or buyer) power as the ability of, in particular, large buyers to substitute away from a given supplier. We employ a bargaining framework and find that the presence of larger and more powerful buyers increases a supplier’s incentives to reduce mar...

Countervailing Power and Chain Stores

Countervailing Power and Product Diversity

To analyse the effects of countervailing power on product variety, I construct a model in which a monopoly manufacturer sells a set of differentiated products through a large retailer and many small, competitive retailers. It is shown that an increase in the countervailing power of the large retailer tends to reduce the number of products manufactured in equilibrium, and the reduction in produc...

On the Formation of Capital and Wealth: IT, Monopoly Power and Rising Inequality

We show information technology (in short IT) caused rising monopoly power and rising income and wealth inequality since the 1970's. Our reasoning proceeds in four steps. step 1 examines surplus wealth the difference between firm’s wealth (equity and debt) and capital employed. Surplus wealth rose from -$0.59 Trillion in 1974 to $24 Trillion in 2015 which is 82% of total stock market value, refl...

Leviathan and Legislative Monopoly Power: Empirical Evidence from OECD Countries

In this paper we test the Leviathan hypothesis, focusing on the joint impact of fiscal decentralization and legislative monopoly power in the growth of the public sector. Two proxies of legislative monopoly power are considered: the control of all relevant houses by the executive party and the margin of majority. Using a dynamic panel-based error correction model on OECD member countries, we fi...