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Less Competition. Consumers Pay More And Get Less

Business leaders and economists like to promote the idea of a free marketplace, where there is plenty of competition and consumers get more benefits, such as lower prices and more choice. So, are consumers getting a good deal? The facts suggest not.

On Monday, April 27, former U.S. Labor Secretary and professor Robert Reich posted the following:

"We’re paying more and getting less because giant companies face less and less competition. For example:

1. U.S. airlines have consolidated into a handful of giant carriers that divide up routes and collude on fares. In 2005 the U.S. had nine major airlines. Now we have just four.

2. 80% of Americans are served by just one Internet Service Provider – usually Comcast, AT&T, or Time-Warner.

3. The biggest banks have become far bigger. In 1990, the five biggest held just 10% of all banking assets. Now the biggest five hold almost 45%.

4. Monsanto owns the key genetic traits in more than 90% of the soybeans and 80% of the corn planted by U.S. farmers.

5. Giant health insurers are larger; the giant hospital chains, far bigger; the most powerful digital platforms (Amazon, Facebook, Google), gigantic.

Whatever happened to antitrust enforcement?"

There are more examples. Here in the Northeast, EverSource, a publicly-traded utility holding company, provides residential energy services in Connecticut, Massachusetts, and New Hampshire. EverSource was created when Northeast Utilities merged with NSTAR Electric & Gas. Northeast Utilities included Connecticut Light & Power, Public Service of New Hampshire, Western Massachusetts Electric, and Yankee Gas. Earlier this year, electricity rates in Boston rose from 29 percent higher to 63 percent higher in February than the national average.

What are your opinions? What consolidation examples come to mind? Are we consumers getting a good deal, or are we getting screwed?

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