Who's in Favor of Competition?

Increasing competition between firms is not a Pareto-improving policy. Increasing competition redistributes income from the owners of firms to workers. This redistribution occurs through higher wages and lower asset prices. We use microdata from the Survey of Consumer Finances to empirically construct the gains and losses to households from increasing competition. We classify a household as in favor of competition if their gains from higher wages are larger than the loss on their portfolio of corporate securities. Nearly all young households favor increasing competition. The fraction of households in favor of competition declines with age. High labor income households accumulate corporate securities at a much higher rate than low labor income households and as a result they oppose competition from a younger age. A large majority of households favor increasing competition. Despite being a minority, households that oppose increasing competition own the vast majority of resources in the economy.

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