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WSJ says, Capitalism Breeds Oligopolies

Everywhere you look, powerful forces are driving American industries to consolidate into oligopolies -- and the obstacles are getting less formidable.

The rewards for getting bigger are growing, particularly in the world of technology, media and telecommunications, where fixed costs are especially large and the cost of serving each additional customer is small. Some snapshots:

• Twenty years ago, cable television was dominated by a patchwork of thousands of tiny, family-operated companies. Today, a pending deal would leave three companies in control of nearly two-thirds of the market.

• In 1990, three big publishers of college textbooks accounted for 35% of industry sales. Today they have 62%.

• In 1993, then-Defense Secretary William Perry told executives of more than a dozen big defense contractors that half their companies wouldn't exist in five years. He was right. Today, five titans dominate the industry, and one of them, Northrop Grumman Corp., Friday made a surprise $5.9 billion bid for TRW Inc., a maker of auto parts, defense and aerospace equipment. The offer includes $5.5 billion in assumed debt.

• In 1996, when Congress deregulated telecommunications, there were eight Baby Bells. Today there are four, and dozens of small rivals are dead.

- Wall Street Journal

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