No policy can guarantee innovation, financial stability, sharper focus on social problems, healthier democracies, higher quality and lower prices. But assertive competition policy would improve our odds, whether through helping consumers to make empowered choices, splitting up large corporations or blocking megamergers. Such structural approaches are more effective than looking over the shoulders of giant corporations and nagging them; they should be a trusted tool of government rather than a last resort.
Pointer from Mark Thoma.
Unfortunately, I can imagine “assertive competition policy” creating more monopoly power. The problem is that government is by far the most secure monopolist. The more “assertive” is government, the more assertive is this monopolist. One can hope that this monopoly power will be exercised wisely. I, for example, hope that the government could break up big banks wisely.
But the public choice of the matter, as Harford points out, is not reliable.
“Policy?”
Structural approaches as a trusted tool of government?
Sounds like central planning to me
and, how has “policy” worked out so far?
assertive competition policy is unlikely to do much when private monopoly is the product of a thicket of regulations and subsidies, and a deliberate government policy objective:
http://www.heritage.org/research/reports/2014/08/how-the-affordable-care-act-fuels-health-care-market-consolidation
Can’t the government just limit its support to any one institution and do the same thing? If it would only guarantee deposits up to a certain total amount per bank, wouldn’t the market take care of the rest?