How a DOJ Economist Approaches Antitrust in America

SPEAKER_2 (0:03)

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Tracy Alloway (0:19)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:24)

And I'm Joe Weisenthal.

Tracy Alloway (0:25)

Joe, we've done a little bit at this point on antitrust. I feel like, kind of interestingly, the first time it ever really came up substantively for us was, I think it was like way back in 2020 or maybe 2021, where we were talking about the potential for antitrust enforcement to bring down inflation. I don't know if you remember that.

Joe Weisenthal (0:48)

Totally, no, I do remember it. I think we were talking about it actually in the context of shipping at the time. Of course, the major source of inflationary pressure was the stress on supply chains.

But then that broad awareness, I would say, and then it's since people paying attention to it more, which is that, how do bottlenecks emerge? How do inflationary bottlenecks emerge? Well, in theory, one source of these inflationary bottlenecks is parts of the economy where there's not very good competition.

Tracy Alloway (1:16)

Yeah, absolutely, and the other interesting thing that's been happening recently is it feels like definitions of antitrust and anticompetitive practices have been expanding, right? You hear this term hipster antitrust all the time, this idea that maybe anticompetitive behavior doesn't just materialize in things like prices, but also in things like labor practices.

Joe Weisenthal (1:40)

Totally, I think the rise of the huge tech giants has contributed to this, because you do have this situation in which it feels like there are entities... Look, if you have like a gigantic steel monopoly or whatever, how is that going to manifest itself as being bad for the economy? Probably by really high steel prices, right? I think in some of these other business models, you sense that there is concern about corporate power, corporate concentration, extremely powerful companies, but it doesn't necessarily manifest as higher prices. In fact, it may be lower prices or maybe there's something not priced at all. None of us pay Facebook directly or whatever it is. Some of these big social media giants.

And so I think that has probably contributed to some extent for like, how do we address market power outside the lens strictly of consumer prices?

Tracy Alloway (2:34)

Absolutely. And the other thing, just going back to shipping, it feels like antitrust is also potentially getting more attention in the context of supply chain resiliency. So yes, you can have high prices because of a monopoly that dominates a particular industry, but you could also have a situation where if something happens, if there's a choke point on that business, as we've seen a number of times in recent years, that it creates a vulnerability for the entire economy.

So all of this got me thinking, clearly there is an impact from antitrust on the overall shape and functioning of the economy. And you see that kind of burst into the policy debate every once in a while. But I really wanted to dive into how do you start to judge the effects of corporate concentration on the overall economy? And I have the perfect guest for you, Joe.

We're gonna be speaking to someone whose day job is basically exactly this. We're gonna be speaking with Ioana Marinescu. She is the principal economist at the Department of Justice's Antitrust Division, also a professor at the University of Pennsylvania. Ioana, thank you so much for coming on All Thoughts.

Ioana Marinescu (3:45)

Thank you so much for having me.

Tracy Alloway (3:46)

What does a principal economist at the DOJ actually do? Walk us through your sort of day to day.

Ioana Marinescu (3:53)

Absolutely. So, you know, in my day job, what we do is we investigate different companies for potential violations of the antitrust laws. And so, you know, all these competition issues that you just talked about.

And so, as an economist, what I do there is I oversee the work of my whole team of PhD economists where they go and do data analysis in order to uncover the effects of anticompetitive practices on all sorts of outcomes, like prices and wages and the quality of products and so on and so forth. And we use both quantitative analysis as well as interviews and documents that we are able to get from the companies, like emails, to better understand how competition works in that particular case and whether there is, in fact, a sign of anticompetitive behavior.

Joe Weisenthal (4:45)

So we talked about in the intro the sort of antitrust thinking, maybe widening the aperture of where you would look to find evidence of uncompetitive behavior beyond perhaps just consumer prices. What type of data are you looking at? When you talk about you're sifting through all this data to look for evidence, what are the types of data that you might look at and what might be, I guess, the signatures of a company or an industry in which anticompetitive actions are a problem?