Thus far, most of the coverage of America’s monopoly problem has come from the 10,000-foot level. The Economist exemplified this with a pair of articles in 2016, in which they wrote that “the fruits of economic growth are being hoarded” by America’s profitable corporate giants, who face negligible competition. The economists Paul Krugman and Larry Summers have linked growing monopoly power to weak growth, and in a recent White House report, Jason Furman and Peter Orszag argued that monopoly has contributed to inequality in wages.
There are many indicators that economic concentration is increasing. We see when we compare the salary of a CEO today to that of a CEO in the 1970s. Thanks to research led by the Open Markets Team, we see how economic concentration increasingly blocks entrepreneurs from starting and growing their own businesses. Similarly, we can see how wealth is increasingly concentrated geographically. As research and writing by Open Markets has detailed, wealth and power is increasingly concentrated in fewer and fewer cities, meaning that as San Francisco, New York City, and Washington thrive, a growing large number of large heartland communities like St. Louis and Memphis increasingly find themselves cut off and hollowed out.
We see some of the most dramatic evidence of concentration at the level of individual economic sectors. Nearly every marketplace in America is vastly more consolidated than a generation ago.
Consider retail; today, a single corporation, Walmart, controls 72 percent of warehouse clubs and super centers in the entire United States. In close to 40 metropolitan areas across America, Walmart sells more than half of all groceries. Amazon, meanwhile, dominates e-commerce in general, and many specific lines of business. The corporation, for instance, sells 74 percent of all e-books and 64 percent of all print books sold online. The story’s often the same for more specialized retail. In eyeglasses, one company, Luxxotica, dominates the manufacture and retail of glasses. In mattresses, two companies control 60 percent of the entire U.S. market.
Much the same is true in food and farming. A generation ago, small, independent operations defined the entire industry. Today, the businesses of beef, pork, and poultry slaughter are all dominated by four giants at the national level. But that greatly understates the problem, as in many regions, a single corporation holds a complete monopoly. Two firms, Dean Foods and the Dairy Farmers of America control as much as 80-90 percent of the milk supply chain in some states and wield substantial influence across the entire industry. As our Food & Power website details, the story is much the same in food-processing, egg production, grain production, and produce farming.
We see some of the most extreme consolidation in hospitals, health insurers, pharmaceutical corporations, and medical device industries. In the average hospital market, the top three hospitals and systems account for 77 percent of all hospital admissions. Many communities face even more monopolistic markets – Grand Junction, Colo. and the whole western portion of the state are served by just one hospital corporation. Hospital corporations across America have also been buying up physician practices in recent years. Hospital ownership of physician practices more than doubled between 2004 and 2011, from 24 to 49 percent. In drug stores, meanwhile, the pending takeover of Rite Aid by Walgreen’s would reduce the market to two giants, along with CVS.
Monopolists have captured control over many lines of manufacturing as well. Corning, an American glass manufacturer, sells 60 percent of all the glass used in LCD screens, and Owens Illinois holds a near monopoly over market for glass bottles in the US. Rexam, a British company, holds a dominant position over the international supply of bottle caps and pharmaceutical bottles.
And, even in industries where many firms compete to sell to end users, monopolists will roll up control of the supply base. In the automobile industry, where manufacturers compete aggressively for customers, a handful of monopolists wield dominant power in the world of auto parts, so that giant firms control the production of things like car seats and dashboards.
Below, we’ve compiled some examples of this concentration as found in different sectors.
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