Competition Is on the Decline, and That’s Fueling Inequality

It’s almost a truism among executives that business is more competitive today than in decades past. Technology has lowered barriers to entry; global trade has put companies in competition with rivals across the globe; the list of billion-dollar “unicorn” startups seems to grow longer by the day. But Jason Furman, the chair of the Council of Economic Advisors under President Obama, argues that the problem with the economy isn’t that there’s too much competition; it’s that there’s not enough. In 2015, he and Peter Orszag published a paper suggesting that competition was on the decline, boosting monopoly power for a small number of incumbent firms. That in turn meant higher “rents” — economic parlance for excess profits, above what a company would normally earn in a competitive market.