Economist Mike Walden: Bigger Companies and Inflation

I’m Mary Walden, with economist MW, welcoming you to the economic perspective.  Today’s program looks at bigger companies and inflation.   Mike, there’s evidence that bigger firms are dominating more industries.  As I suspect is the case with most of economics, there are probably upsides and downsides to this trend.  Please weigh the pluses and minuses for us.

  1. See bigness everywhere – technology, health care, cell phone companies, entertainment, to name a few – have come about through growth or through mergers and consolidation
  2. Likely biggest downside – too much control, not only in pricing, but in hiring
  3. Harder for new firms to break in
  4. But some upsides
  5. Larger firms seem to invest more – makes them more productive
  6. And evidence that if firm is more productive – price increases will be less
  7. So maybe trading off bigness for lower inflation
  8. But may become – or already is – a public policy issue

And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.