Two decades ago, the US had competitive free markets and oligopolies were par for the course in Europe. Today, the roles are reversed. Competition for consumer services is thriving in Europe, and America is the land of consolidated corporate power. What happened?
A perfect American storm of unfettered mergers and acquisitions, intense lobbying, big campaign donations, and poor policy choices, says economist Thomas Philippon, whose book on this topic hit the shelves last month.
Lack of competition is why your bills are so damn high
The average American household spends twice as much on cellphone bills as the average French household.
For internet, many Americans have the choice between Comcast and, well, Comcast –– while French people typically have at least 5 providers to choose from.
Similarly, profits per passenger airline mile are about 2x higher in the US than in Europe. During the past couple of decades, the American airline industry saw mega merger after mega merger, while the EU paved the runway for cheap competitors like Ryanair and EasyJet.
Philippon’s research suggests the median American household would save about $300 a month if the US championed pro-competitive policies.