Superstar companies may not be evil, just good at what they do

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Are US giants hoarding patents and research? Are they pushing out underdogs? Or are they simply more efficient, asks Noah Smith

The US Patent and Trademark Office shows a few companies have been applying for a larger share of patents, as well as buying up an increasing percentage of the patents that already existBig companies are taking over the US In industry after industry, from telecoms to retail to banking to healthcare, larger corporations are gobbling up market share from smaller ones — sometimes by merging with them, sometimes by taking their business.

If competition really is dying, the US government needs to attack the problem somehow — blocking mergers, breaking up more companies, or enacting policies such as minimum wages and union-friendly laws that balance out corporate power. In some extreme cases, such as medical care, government health insurance might even be necessary to force down prices on consumers’ behalf.

A recent paper by Chad Syverson of the University of Chicago Booth School of Business argues that it’s still possible that the rise in mark-ups is an illusion — the result of mis-measurement by economists.

Some economists strenuously dispute the idea that top companies deserve the “superstar” label at all. In a recent paper, Germán Gutiérrez and Thomas Philippon argue that since about 2000, top US companies have largely stopped improving the productivity of their operations, and have instead begun simply absorbing capital, employees and other resources from rivals .

 

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