Inflation is one of the most frequent words on American consumers’ ears these days. In addition to the usual causes of inflation such as supply and demand imbalances and loose monetary policy, there is another factor that may exacerbate inflation, which is excessive industry concentration. A handful of industry giants hold the lifeblood of the U.S. economy, and they have the ability to raise prices without losing customers.
In a competitive market, companies try to keep their prices as low as possible in order to compete for customers; in a less competitive environment, large companies become market dominators and price controllers. Some politicians and analysts have pointed out that these companies have raised prices excessively under the pretext of inflation to offset rapidly rising costs, but they have reaped record profits after raising prices.
The energy industry is one of the most representative cases. During the global Covid-19 pandemic, energy companies have taken a hit as socioeconomic activity and people travel less. But now, under the combined influence of economic recovery and geopolitical conflicts, oil giants such as Chevron and Exxon Mobil are enjoying the dividends brought by high-priced energy.
Since the 1980s, the views of American liberal economists on antitrust law have changed, the US government’s antitrust enforcement has gradually loosened, and the industry concentration of all walks of life has also begun to increase. In addition to the energy industry, this is true of banking, communications, pharmaceuticals, aviation, meat processing and even carbonated beverages.
To solve the problem of excessive industry concentration, the government’s active anti-monopoly law enforcement is inseparable. U.S. President Joe Biden has asked the Federal Trade Commission several times to investigate whether oil majors have engaged in “illegal manipulation” to profit from high oil prices. However, the road to antitrust still has a long way to go.
Is America’s Big Business Raising Prices Greed or Inflation? Click on the video to see what it is!