Gobierno Grande, Empresas Grandes, Proteccionismo Exacerbado

October 23, 2020

It is commonly assumed on the left and (increasingly) on the right that free markets foster — and that state regulation controls — the growth and market power of large corporations. Liberalized international trade and investment policies, in particular, are often criticized by market skeptics as a tool that large companies use to strengthen their dominant position at the expense of workers and potential competitors. Liberals and other free-market supporters, of course, argue the opposite: that free-market competition encourages "creative destruction" - that is, the economically valuable displacement of the old, with big business being displaced by newer competitors, as first described by economist Joseph Schumpeter — and thus serves as a powerful cap on large companies, which often lobby for and benefit from trade restrictions and other state regulations that discourage new entrants to the market.

A new study by Purdue University economists Mara Faccio and John McConnell provide firm new support for the "liberal" view.