Is Amazon’s Scale a Harm?
Under the leadership of its professional anti-Amazoner Chair Lina Khan, the Federal Trade Commission (FTC) has finally filed its antitrust complaint against Amazon. No, not the complaint about how it’s unfair to take six clicks to cancel your Prime membership. This is the big one. It mostly revolves around sellers needing to use Amazon’s fulfillment services to be part of Amazon Prime and lowering reach rankings if products are priced lower on other sites.
Instead of covering the arguments in the complaint, I want to use the complaint as an example of how I use the basics of supply and demand to sort through one of the arguments made by the FTC. Nothing about the use of price theory implies certain policy conclusions about the case. I’m just trying to be transparent, as I’ve done in the past, about how I use economics to reason about these important questions. Besides self-indulgence, the hope is that the examples help readers do the same.