In an era of technological progress and easy communication, it might seem reasonable to assume that the world’s working people have never had it so good. But wages are stagnant and prices are rising, so that everything from a bottle of beer to a prosthetic hip costs more. Economist Jan Eeckhout shows how this is due to a small number of companies exploiting an unbridled rise in market power—the ability to set prices higher than they could in a properly functioning competitive marketplace. Drawing on his own groundbreaking research and telling the stories of common workers throughout, he demonstrates how market power has suffocated the world of work, and how, without better mechanisms to ensure competition, it could lead to disastrous market corrections and political turmoil.
The Profit Paradox describes how, over the past forty years, a handful of companies have reaped most of the rewards of technological advancements—acquiring rivals, securing huge profits, and creating brutally unequal outcomes for workers. Instead of passing on the benefits of better technologies to consumers through lower prices, these “superstar” companies leverage new technologies to charge even higher prices. The consequences are already immense, from unnecessarily high prices for virtually everything, to fewer startups that can compete, to rising inequality and stagnating wages for most workers and severely limited social mobility.
A provocative investigation into how market power hurts average working people, The Profit Paradox also offers concrete solutions about how to fix the problem it and restore a healthy economy.
About the speaker
Jan Eeckhout is ICREA research professor of Economics at Pompeu Fabra University (UPF), Barcelona. He received his Ph.D. in Economics from the London School of Economics in 1998. His teaching and research interests lies in macroeconomics, with a special emphasis on the labor market. He studies the macroeconomic implications of market power, as well as the economics of the labor market and cities. His book, ”The Profit Paradox” is published by Princeton University Press, and his work has featured in the media, including The Economist, The Wall Street Journal, FT, New York Times and Bloomberg. In the past, Jan Eeckhout has been a tenured professor at the University of Pennsylvania and at University College London. He has also been the Louis A. Simpson Visiting Professor at Princeton University, he has been a visiting professor at NYU Stern and a visiting scholar at MIT. At UPF he has been the chairman of the Department of Economics and Business.
Practical information
This seminar took place on February 21, 2022 at 12 noon (CET).
Jan Eeckhout - The Profit Paradox
