Nobel Prize-winning economist Paul Krugman has written a New York Times op-ed criticizing Amazon. For book selling, he goes so far as to say that it has a “robber-baron-type market power.”
In his piece, Krugman (pictured, via) compares Amazon with Standard Oil and talks about the consequences that may ensue should the online retail giant continue its current standard of operations. He feels that Amazon has abused its powers to retaliate against Hachette throughout the dispute between the two companies. Here’s an excerpt from the article:
“So far Amazon has not tried to exploit consumers. In fact, it has systematically kept prices low, to reinforce its dominance. What it has done, instead, is use its market power to put a squeeze on publishers, in effect driving down the prices it pays for books — hence the fight with Hachette. In economics jargon, Amazon is not, at least so far, acting like a monopolist, a dominant seller with the power to raise prices. Instead, it is acting as a monopsonist, a dominant buyer with the power to push prices down.”
