Putting Profits in Perspective
The fact that some US companies are generating returns that greatly exceed historical averages has been seen by some as an indication of a weak competitive environment. But outsize profits are more likely to reflect changes wrought by the rapid digitization of the US economy.
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BERKELEY – High profits are usually viewed as a sign of a company’s economic prowess, the result of innovation and efficiency forged by healthy competition. But, as a recent report by the US Council of Economic Advisers shows, high profits can have another cause: market concentration.