Ben Waber reviewed The Profit Paradox by Jan Eeckhout
A Great Look at the Costs of Antitrust Failures with Some Factual Errors
4 stars
This book is a great look at the societal costs of extremely powerful, large firms. Importantly, Eeckhout examines this from the perspective of other companies, workers, and consumers, demonstrating how it costs every actor except those that have entrenched market power. The story becomes shakier when the book examines talent markets, and Eeckhout brings an economist's understanding of performance of executives (i.e. higher pay means higher performance) to the discussion, undercutting his larger argument. There's also a strange digression on labor mobility, which is also probably wrong (I rechecked after reading because the argument strains credulity) - Eeckhout claims that people change jobs less than they did prior to 1980, which is demonstrably false if you use most normal metrics (e.g. average tenure at current firm). I'm guessing he slices the data in a particular way to show something that's statistically significant in some of his papers, but IMO if …
This book is a great look at the societal costs of extremely powerful, large firms. Importantly, Eeckhout examines this from the perspective of other companies, workers, and consumers, demonstrating how it costs every actor except those that have entrenched market power. The story becomes shakier when the book examines talent markets, and Eeckhout brings an economist's understanding of performance of executives (i.e. higher pay means higher performance) to the discussion, undercutting his larger argument. There's also a strange digression on labor mobility, which is also probably wrong (I rechecked after reading because the argument strains credulity) - Eeckhout claims that people change jobs less than they did prior to 1980, which is demonstrably false if you use most normal metrics (e.g. average tenure at current firm). I'm guessing he slices the data in a particular way to show something that's statistically significant in some of his papers, but IMO if you have to slice the data that closely to make a point it's probably not that important. He also weirdly ignores taxes as part of a toolbox of fixes to some of the problems he outlines. All that being said, this is still an excellent book that cuts to the heart of issues with market power. Highly recommend
