Republic, Lost_ How Money Corrupts Congress--And a Plan to Stop It - Lawrence Lessig [80]
The story gets more complicated if there is more than one entity that benefits from the status quo. Then each faces what economists call a “free-rider problem.” It may be good for each that the status quo is preserved, but it is better for each if the status quo can be preserved without that interest having to pay to preserve it. Each, in other words, would like to “free-ride” on the spending of the others to preserve the status quo. The interests thus don’t naturally want to pay to avoid the reform. They instead need to coordinate to ensure that each pays its way.
This makes the case for reform much more promising (for the reformer at least) if markets are competitive. If there are a large number of entities comprising a special interest, it is much less likely that these entities could coordinate their fight to preserve the status quo. Thus in a competitive market, reform is simpler than in a concentrated, or monopolistic, market, if only because the targets of that reform have a harder time defending against it.
The problem for us, however, is that major markets in America have become heavily concentrated, and on key issues it has become much easier for allies to coordinate. Indeed, in the critical markets for reform—finance, for example—firms are more concentrated today than ever before. That concentration makes coordination much simpler.
As Barry Lynn has described this concentration:
Colgate-Palmolive and Procter & Gamble split more than 80 percent of the U.S. market for toothpaste;
Almost every beer is manufactured or distributed by either Anheuser-Busch InBev or MillerCoors;
Campbell’s controls more than 70 percent of the shelf space devoted to canned soups;
Nine of the top ten brands of bottled tap water in the United States are sold by PepsiCo (Aquafina), Coca-Cola (Dasani and Evian), or Nestlé (Poland Spring, Arrowhead, Deer Park, Ozarka, Zephyrhills, and Ice Mountain);
Wal-Mart exercises a de facto complete monopoly in many smaller cities, and it sells as much as half of all the groceries in many big metropolitan markets. [It] delivers at least 30 percent and sometimes more than 50 percent of the entire U.S. consumption of products ranging from soaps and detergents to compact discs and pet food;
The world’s supply of iron ore is controlled by three firms (Vale, Rio Tinto, BHP Billiton);
A few immense firms like Mexico’s Cemex control the world’s supply of cement;
Whirlpool’s takeover of Maytag in 2006 gave it control of 50 to 80 percent of U.S. sales of washing machines, dryers, dishwashers and a very strong position in refrigerators;
Nike imports up to 86 percent of certain shoe types in the United States—for basketball, for instance—and more than half of many others;
As of March 2009, Google had captured 64 percent of all online searches in the United States;
TSMC and UMC have together captured 60 percent of the world’s demand for semiconductor foundry service—in which a company serves as a sort of printing press for chips that are designed and sold by other firms—and have concentrated that business mainly in one industrial city in Taiwan;
Corning has captured a whopping 60 percent share of the business of supplying [LCD glass].13
These are just market concentration statistics. For antitrust purposes, they don’t necessarily translate into market power (though they are certainly high), and it is market power that triggers the special limits of antitrust law. So by pointing to these concentrated markets, I’m not suggesting that the Antitrust Division of the Justice Department or the Federal Trade Commission is not doing its work.
These concentrated markets do, however, translate into a greater opportunity for coordinated political action: for the fewer corporations there are with interests at stake, the fewer it takes to persuade to support a campaign to defend those interests. Thus, concentrated markets