Populism and Oligopolies: A Retrospective and Prospective View

Populism can be described as discontent and increased social-political activism from groups who feel that their interests are being neglected or harmed. In the USA, there have been populist movements relating to a broad array of social/economic/political causes. One area of increasing populist response is the commanding influence and increasing market concentration in online commerce. A prominent example is Amazon, whose market presence greatly exceeds its competitors. US antitrust law is predicated on preventing “consumer harm” from predatory business practices. However, Amazon represents a novel form of oligopolistic behavior that lacks close historical comparison. It has not shown any of the traditional “bad behaviors” that would normally trigger an antitrust response. In contrast to traditional oligopolies, they have not exhibited rent-seeking behavior normally associated with firms in market-dominant positions but instead tolerate low-profit margins across their product portfolio to grow market share. The current populist sentiments against “big business” have strong historical analogies. In the late 1800s, the railroad industry had a commanding influence over foundational aspects of economic and social conditions in the USA and Canada. In contrast to Amazon, the way railroads used their power would later be considered “consumer harm.” This led to a strong populist response from aggrieved economic interests such as the Granger movement. Further response from politicians, influenced by these interests, resulted in heavy government regulation and subsidization of alternative transportation modes. Eventually, the regularity of overreach was reversed. The railroad industry no longer had the commanding market-making influence that it once did. This entry compares the social-political dynamics that defined two companies in different eras. While the technological characteristics of these two industries are different, both grew to become critical infrastructure of the national economy. The ability to define the market led to populists’ responses that resulted in far-reaching implications.