Next time you go shopping for a new cellphone plan, you're likely to find that the options are a lot better than they were a couple of years ago. Prices are lower. You don't have to sign up for one of those annoying two-year contracts. You'll probably get unlimited phone calls and text messages as a standard feature — and a lot more data than before.Capitalism only works if there is competition; every economist will tell you this. So why do we ever permit mergers?
If that happens to you, you should thank the Obama administration — specifically, the antitrust watchdogs at the Department of Justice.
Many of the positive developments of the past four years have been driven by T-Mobile, which until recently was the smallest of the nation's four national wireless providers. Back in 2011, AT&T was on the verge of gobbling up T-Mobile, which would have turned the industry's Big Four into the Big Three and eliminated the industry's most unpredictable company.
"Even prior to the merger, T-Mobile was known as being this maverick competitor," says Brent Skorup, a researcher at the Mercatus Center. If the merger had gone through, the industry's maverick would have disappeared.
But then the Obama administration intervened to block the merger. With a merger off the table, T-Mobile decided to become a thorn in the side of its larger rivals, cutting prices and offering more attractive service plans. The result, says Mark Cooper, a researcher at the Consumer Federation of America, has been an "outbreak of competition" that's resulted in tens of billions of dollars in consumer savings.
Thursday, January 7, 2016
Competition is Good
And mergers are almost always bad for consumers: