Monopolies Cost Americans $300 a Month. We're No Longer the Land of Free Markets
— November 13, 2019
By Thomas Philippon
This is a result of policy choices. In 1999, the US had free and competitive markets while European markets were dominated by oligopolies. The airline industry is a prime example. Over the past two decades a wave of mergers has turned the US airline industry into an oligopoly while Europe has opened its skies to competition, thanks in part to low-cost carriers such as Ryanair and EasyJet. US regulators allowed these mergers to happen without meaningful challenges. EU regulators, on the other hand, encouraged the entry of low-cost competitors by making sure they could get access to takeoff and landing slots.
There are many layers of irony in this historic reversal. One irony is that the free market ideas and business models that benefit European consumers today were inspired by US markets. Another irony is that some leftwing US politicians are now contemplating policies that most Europeans would find extreme. We do not think private health insurance companies should be abolished. We favor wealth taxes, but we do not think they are a cure for all ills.
Read the full article in The Guardian.
Thomas Philippon is a Professor of Finance.