Legal Mechanisms Supporting Economic Concentration

Abstract

Economic concentration has become a political and social issue, beyond its direct economic implications. Public outrage has been expressed at the concentration of economic power in the hands of few large conglomerates and those wielding power through them. In this paper I explore the legal mechanisms which allow for and facilitate such economic concentration. I explore antitrust and corporate law and their interaction, from the focus on micro-effects of specific markets and firms (rather than macro-effects), to specific rules which allow for conglomerate growth and pyramidial structures. Contrasting the economic benefits of concentration with public outcry, I assess the political factors driving the calls for reducing concentration, and conclude that while economic rhetoric looms large in the debate, the true issues are political and the feeling of 'the common man' that he lacks influence and is taken advantage of. The calls for regulation are thus a cry for the state to step in and wield a larger stick than that held by large conglomerates. In essence, a call for state political power to loom larger than firm economic power.

Note: Downloadable document is in Hebrew.

Keywords: economic concentration, economic power, antitrust, corporate law

JEL Classification: D43, D63, D72, E61, E65, G38, H32, K21, K22