respond to student response below in 150 words, ensure you use atleast 1 reference
One of the criticisms of oligopolies is the adverse impacts these firms have on income distribution. Do you believe that is a valid criticism? Discuss with appropriate examples
I believe the oligopolies have the potential to create a severe gap in income distribution between top executives, employees, and consumers. Of course, there will always be industries with oligopolies that are an exception to this rule, but naturally giving power to a few select firms, businesses, or individuals has the potential to get out of hand. Historically, markets run by just a few companies have been difficult for new companies to attempt entry. For example, Visa and Mastercard would blacklist banks and other financial institutions that started carrying American Express. A more concrete example from The Washington Post states that “the Justice Department uncovered in 2010, top executives at Google, Apple, Intel, Intuit, Pixar and Adobe made secret agreements not to recruit one another’s employees in order to suppress salaries, even as their profits soared. Tech workers who brought an antitrust case against this cartel estimate that the scheme in effect stole billion from more than 60,000 workers” (Khan and Vaheesan). Extrapolated over many years, this money grows exponentially and goes to the bottom line profit of the company and then paid out in dividends to the main company owners – creating income inequality and reducing the middle class of America. Moving forward, the FCC and SEC must be careful to allow businesses to make a product but also must be watchful to make sure there is not an abuse of power.
Khan, Lina, and Sandeep Vaheesan. “How America Became Uncompetitive and Unequal.” The Washington Post, WP Company, 13 June 2014, www.washingtonpost.com/opinions/how-america-became-uncompetitive-and-unequal/2014/06/13/a690ad94-ec00-11e3-b98c-72cef4a00499_story.html?utm_term=.a3e5a77537d2.
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