Week 06 Response -- One Question

in #response4 months ago


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This is a response to the class question from @trostparadox. The question is as follows, "Many people assert that government regulation is the key to preventing powerful corporate interests from gaining and maintaining monopoly power. However, when regulation occurs at the federal level, corporate lobbyists can easily influence regulations in a way that stifles competition.
How can a return to federalism (i.e. empowering the states by limiting the legislative and regulatory power of the federal government) make it more difficult for powerful corporations to exert monopoly power?"

A return to federalism would distribute power over the states, which can decentralize power. For a monopoly to gain "power", they need to be able to control the market they reside in. This can be done by preventing competition from entering the marketplace. To prevent competing entrepreneurship is more complicated than it sounds. To prevent a new business from entering a market, some companies simply buy the new company, but this has drawbacks for the purchasing company. That company has now invited other entrepreneurs to make small companies in order to get easy money. The best way to prevent competition is for making competition illegal, or the next best thing, highly regulated. This is where federalism affects monopoly power. For a company to "encourage" regulation, they may support specific politicians that may listen to their suggestions for regulations. The reason federalism may prevent monopoly power, is due to the number of politicians a company would need to "encourage" in order to get a regulation in place. Without good amount of federalism, it is easier to influence anywhere from two to five politician in order to get the regulation you want. In a way, this is why medical bills can be charged so high. Regulation has made making new competing hospitals very difficult. The price on medical bills is also due to the amount an insurance company pays off a client's bill. By returning to a more federalist government, choices on regulation can be moved to a state level instead of affecting the entire nation. Monopoly power would then be restricted to specific states where the company can avoid competition