winner-take-all economy

The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us
by Robert H. Frank, Philip J. Cook
Published 2 May 2011

I S If the least talented contestants were to drop out and become engi­ neers, teachers, or production workers, the performance levels of the top performers in winner-take-all markets would not fall by much, if at all. In return, we would get additional output of much greater value. In short, private market incentives lead too many contestants to enter winner-take-all markets, often at high cost in terms of forgone output in other markets. A More Realistic Economy Our hypothetical winner-take-all economy is obviously a stick-figure caricature. Its simplicity is useful, however, insofar as it enables us to see more clearly the forces that give rise to overcrowding in winner­ take-all markets. With this picture in mind, we can now flesh out the example to see how career decisions might play out under conditions more like the ones that exist in complex modern economies.

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The invisible-hand theory says that we get socially optimal career choices when people make well-informed, self-serving decisions on the basis of market incentives. But it also says, by implication at least, that if people generally overestimate their prospects in winner-take-all markets, the resulting career choices will not be socially (or even indi­ vidually ) optimal. W hatever its ultimate source, the Lake Wobegon ef­ fect describes just such a bias, for it makes participation in winner-take-all markets seem misleadingly attractive. 106 The Winner-Take-All Society A Simple Winner-Take-All Economy Free marketeers will not be surprised that we get inefficient outcomes when people make career choices on the basis of inaccurate informa­ tion.

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We will call markets of this type "mass" winner­ take-all markets. Large prizes in many other winner-take-all markets result from a small number of buyers who are intensely interested in the winner's performance. Examples in this category, which we call "deep-pocket" winner-take-all markets, include the markets for top painters and sculptors, for attorneys who are effective at keeping organized crime figures out of jail, and for geologists who are unusually good at find­ ing oil. As we will see in chapter 3, the scope of mass winner-take-all mar­ kets has grown over time relative to that of deep-pocket winner-take­ all markets. But as our analysis in chapter 6 will make clear, the distributional and efficiency issues posed by these two market types are essentially the same.

Luxury Fever: Why Money Fails to Satisfy in an Era of Excess
by Robert H. Frank
Published 15 Jan 1999

Occupational Choice in a Winner-Take-All Economy A third way in which higher tax rates at the top would actually stimulate the economy stems from a relationship largely ignored by trickle-down theorists—namely, the effect of tax policy on occupational choice. Economic orthodoxy asserts that free-market incentives allocate talent across different occupations in socially beneficial ways. This assertion rests on the assumption that an individual’s reward in any occupation depends on absolute performance. As discussed in chapter 3, however, the modern economy is increasingly permeated by winner-take-all markets, in which small differences in relative performance translate into large differences in reward.

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And if any one thing is certain, it is that growing income inequality has not resulted from any weakening of market forces. On the contrary, global and domestic competition has never been more intense than now. THE SPREAD OF WINNER-TAKE-ALL MARKETS In our recent book, Philip Cook and I argued that the recent surge in earnings inequality stems, in large part, from the growing importance of what we call “winner-take-all markets”—markets in which small differences in performance often give rise to enormous differences in economic reward.20 Long familiar in entertainment, sports, and the arts, these markets have increasingly permeated accounting, law, journalism, consulting, medicine, investment banking, corporate management, publishing, design, fashion, and a host of other professions.

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THE SPREAD OF WINNER-TAKE-ALL MARKETS In our recent book, Philip Cook and I argued that the recent surge in earnings inequality stems, in large part, from the growing importance of what we call “winner-take-all markets”—markets in which small differences in performance often give rise to enormous differences in economic reward.20 Long familiar in entertainment, sports, and the arts, these markets have increasingly permeated accounting, law, journalism, consulting, medicine, investment banking, corporate management, publishing, design, fashion, and a host of other professions. To understand the recent surge in earnings inequality, and hence to predict future income and consumption patterns, it is helpful to look briefly at the forces that give rise to winner-take-all markets. (The material that follows is developed in much more detail in The Winner-Take-All Society, whose readers may wish to skip this chapter and move directly to chapter 4.) Winner-take-all markets have proliferated in part because technology has greatly extended the power and reach of the planet’s most gifted performers. At the turn of the century, when the state of Iowa alone had more than 1,300 opera houses, thousands of tenors earned adequate, if modest, livings performing before live audiences.21 Now that most music we listen to is prerecorded, however, the world’s best tenor can be literally everywhere at once.

The Internet Is Not the Answer
by Andrew Keen
Published 5 Jan 2015

“What seems clear is that Amazon is using its market power,” a June 2014 New York Times editorial notes about Amazon’s decision to unstock Hachette’s books, “to get the best deal for itself while it squeezes publishers, annoys its customers and hurts authors by limiting their sales.”56 “Amazon’s Power Play” is how the New York Times summarized this bullying behavior. This is an accurate summary not only of the Internet’s winner-take-all economy, but also of Amazon’s dominant place in it. So much for those “decentralizing, globalizing, harmonizing and empowering” qualities that Nicholas Negroponte promised would be a “force of nature” of the digital age. Jeff Bezos would, of course, disagree, arguing, no doubt, that such a generalization is a narrative fallacy. But he’d be wrong. The real force of nature in the digital age is a winner-take-all economy that is creating increasingly monopolistic companies like Amazon and multibillionaire plutocrats like Bezos himself.

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Rather than producing more jobs or prosperity, the Internet is dominated by winner-take-all companies like Amazon and Google that are now monopolizing vast swaths of our information economy. But why has this happened? How has a network designed to have neither a heart, a hierarchy, nor a central dot created such a top-down, winner-take-all economy run by a plutocracy of new lords and masters? Monetization In The Everything Store, his definitive 2013 biography of Amazon founder and CEO Jeff Bezos, Brad Stone recounts a conversation he had with Bezos about the writing of his book. “How do you plan to handle the narrative fallacy?” the Internet entrepreneur asked, leaning forward on his elbows and staring in his bug-eyed way at Stone.9 There was a nervous silence as Stone looked at Bezos blankly.

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“It’s the obvious destination for the work-hard-play-hard set.”13 Like an express suddenly roaring past a freight train, the second version of the Internet replaced the first with remarkable speed. What is particularly striking is how few people successfully jumped from one train to the other. But one person who did make the leap was Marc Andreessen. Indeed, more than any other single individual, Andreessen was responsible for transforming the nonprofit Internet into a winner-take-all economy. Andreessen had become familiar with the World Wide Web in the early nineties as a computer science student at the University of Illinois, where he was also earning $6.85 an hour working as a programmer at the National Center for Supercomputing Applications (NCSA), a National Science Foundation–funded research center attached to the university.

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies
by Erik Brynjolfsson and Andrew McAfee
Published 20 Jan 2014

Suddenly the top-quality provider can capture the whole market. The next-best provider might be almost as good, but it will not matter. Each time a market becomes more digital, these winner-take-all economics become a little more compelling. Winner-take-all markets were just coming to the fore in the 1990s, when Frank and Cook wrote their remarkably prescient book. They compared these winner-take-all markets, where the compensation was mainly determined by relative performance, to traditional markets, where revenues more closely tracked absolute performance. To understand the distinction, suppose the best, hardest-working construction worker could lay one thousand bricks in a day while the tenth-best laid nine hundred bricks per day.

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A superstar or long-tail economy with low barriers to entry is still one with far more inequality. The Power Curve Nation An economy dominated by winner-take-all markets has very different dynamics than the industrial economy to which we are accustomed. As we discussed at the beginning of the chapter, the earnings of bricklayers will vary a lot less than the winner-take-all earnings of app developers, but that’s not the only difference. Instead of stable market shares, where revenues and income correspond proportionally to differences in talent and effort, competition in winner-take-all markets will be much more unstable and asymmetrical. The great economist Joseph Schumpeter wrote of “creative destruction,” where each innovation not only created value for consumers but also wiped out the previous incumbent.

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The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead
by David Callahan
Published 1 Jan 2004

No chief financial officer wants to cook earnings reports, and no accountant wants to rubber-stamp these reports. No journalist wants to make up her sources. But when you look at the effects of inequality in our society, you can understand why respectable people consistently do all of these things. The winner-take-all economy has loaded up the rewards for those who make it into the Winning Class, and left everyone else with little security and lots of anxiety. Inequality has also pulled us apart, weakening our faith that others follow the same rules that we do. Unfortunately it gets worse. Two decades of change in American economic life—and a steady string of victories for laissez-faire ideologues—hasn't just shifted the financial incentives for individuals or the operating strategies of business organizations.

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In the same year, Tufts University rejected one in three valedictorians who applied, as well as a number of applicants with perfect 1600 scores on the SAT.14 College admissions directors at the best schools talk about the immense challenge of winnowing down large applicant pools filled with one perfect candidate after the other. Many people scoff at the importance attached to name-brand schools, and it's easy to condemn the less savory motives of parents who want a Harvard kid. But the reality is that in a winner-take-all economy, and a society increasingly obsessed with "branding," a degree from a prestigious college matters more than ever. For example, many recruiters for America's best companies focus their search for entry-level professionals exclusively on the top schools in the nation, and for good reason. As any headhunter will explain, hiring personnel is extremely time consuming and fraught with risk.

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He will meet a lot of guys from humble backgrounds similar to his own who are under intense pressure to perform at a very high level and keep their toehold in the Winning Class. Danny will also enter a world so rife with cheating that his own past sins will seem laughable in comparison. Consider the San Francisco Giants as one example of the winner-take-all market in sports. On opening day in spring 2002, the Giants paid its starting roster of twenty-six players a total team salary of $78.3 million. Almost a fifth of this pie went to one player: left fielder Barry Bonds, who took home $15 million during the season. Over half of the total team salary in 2002 went to five of the Giants' top players.

The People's Platform: Taking Back Power and Culture in the Digital Age
by Astra Taylor
Published 4 Mar 2014

Networked technologies do not resolve the contradictions between art and commerce, but rather make commercialism less visible and more pervasive. The Internet does not close the distance between hits and flops, stars and the rest of us, but rather magnifies the gap, eroding the middle space between the very popular and virtually unknown. And there is no guarantee that the lucky few who find success in the winner-take-all economy online are more diverse, authentic, or compelling than those who succeeded under the old system. Despite the exciting opportunities the Internet offers, we are witnessing not a leveling of the cultural playing field, but a rearrangement, with new winners and losers. In the place of Hollywood moguls, for example, we now have Silicon Valley tycoons (or, more precisely, we have Hollywood moguls and Silicon Valley tycoons).

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Off-line, local radio stations have been absorbed by Clear Channel and the major labels control more of the music market than they did before the Internet emerged. And online Gates has to position herself and her work on a monopolists’ platform or risk total invisibility. Monopolies, contrary to early expectations, prosper online, where winner-take-all markets emerge partly as a consequence of Metcalfe’s law, which says that the value of a network increases exponentially by the number of connections or users: the more people have telephones or have social media profiles or use a search engine, the more valuable those services become. (Counterintuitively, given his outspoken libertarian views, PayPal founder and first Facebook investor Peter Thiel has declared competition overrated and praised monopolies for improving margins.30) What’s more, many of the emerging info-monopolies now dabble in hardware, software, and content, building their businesses at every possible level, vertically integrating as in the analog era.

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You can become big fast, and that favors the domination of strong people.” Preferential attachment, network effects, and the power laws they produce matter, in part, because they intensify and epitomize the old inequities we hoped the Internet would overthrow, from the star system to the hit-driven manufacturing of movies, music, and books. Winner-take-all markets promote certain types of culture at the expense of others, can make it harder for niche cultures and late bloomers to flourish, and contribute to broader income inequality.26 More specifically, where cultural production is concerned, the persistence of power laws refutes the myth of independent creators competing on even ground.

Winner-Take-All Politics: How Washington Made the Rich Richer-And Turned Its Back on the Middle Class
by Paul Pierson and Jacob S. Hacker
Published 14 Sep 2010

HN89.S6H33 2010 306.3'42097309045—dc22 2010014515 ISBN 978-1-4165-8869-6 ISBN 978-1-4165-9384-3 (ebook) To our children—Ava and Owen, Sidra and Seth— inheritors of a hopefully stronger America Contents Introduction: The Thirty-Year War Part I: The Puzzling Politics of Winner-Take-All 1 The Winner-Take-All Economy 2 How the Winner-Take-All Economy Was Made 3 A Brief History of Democratic Capitalism Part II: The Rise of Winner-Take-All Politics 4 The Unseen Revolution of the 1970s 5 The Politics of Organized Combat 6 The Middle Goes Missing Part III: Winner-Take-All Politics 7 A Tale of Two Parties 8 Building a Bridge to the Nineteenth Century 9 Democrats Climb Aboard 10 Battle Royale Conclusion: Beating Winner-Take-All Acknowledgments Notes Index About the Authors Introduction The Thirty-Year War For those working on Wall Street, 2009 was a very good year.

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Our current crisis certainly bears emphasis, in part because it so clearly reveals the sources and costs of the winner-take-all economy. And by the end of our investigation, the roots and realities of contemporary discontents will indeed be apparent. But, as will become clear, our current crisis is merely the latest in a long struggle rooted in the interplay of American democracy and American capitalism. This struggle has not unfolded overnight. Nor is it a simple linear tale of sweeping, inevitable change. The advancing tide of the winner-take-all economy sometimes feels like a force of nature. (Certainly, it is convenient for its beneficiaries to describe it that way.)

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Nor have many been as rhapsodic as Republican Senator Phil Gramm, who described Wall Street as a “holy place.” But, for reasons we shall explain and with consequences we will unveil, all of America’s political class have felt the increasing pull of the winner-take-all economy. Our story unfolds in three parts. Part 1 delves into the mystery of the winner-take-all economy. We come face-to-face with what has really happened in the American marketplace over the last generation: who’s won and who’s lost in the thirty-year war, and how government has played an integral role in creating these new economic realities.

Cogs and Monsters: What Economics Is, and What It Should Be
by Diane Coyle
Published 11 Oct 2021

Economists have become experts at answering narrow policy questions with ever-better empirical approaches and bigger data sets; applied microeconomics is in fine fettle. But there are few persuasive approaches to pressing political questions such as how to tackle the increasing gaps between prosperous cities and poor towns, how to keep a winner-take-all economy innovative and competitive, how to ensure the gains from economic growth are more fairly shared. Economists need to start providing policy-makers with guidance for an increasing returns economy. But—to return to the socialist calculation debate with which this chapter started—a bias toward government solutions is no answer.

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The political dynamics are clear—the political economy cycle is responding to increased market power and the consequent political influence of big companies by making regulatory interventions and tougher competition policy inevitable. However, the economic analysis of digital markets is a work in progress. Even taking the consumer welfare standard as the right approach, there is no settled view about how to assess consumer welfare in these winner-take-all markets with many losers, tipping points, and complex ecosystems. As it happens—because of the scale of their domestic markets—the big digital companies are all American or Chinese. So geopolitics is intruding. This means the return of a debate about whether these foreign corporations can be allowed to operate freely in each other’s territories, or whether Europe needs its own national digital champions, long after the Reagan and Thatcher revolutions seemed to have buried state economic activism.

Tech Titans of China: How China's Tech Sector Is Challenging the World by Innovating Faster, Working Harder, and Going Global
by Rebecca Fannin
Published 2 Sep 2019

Tencent is also hunting in the region and has invested in fast-growth ride-hailing and e-commerce leaders in India and Indonesia plus startups in Vietnam and Thailand. China’s BAT Push Outward Despite the growing frictions and challenges on the US-China trade and tech fronts, China tech companies are ambitiously pushing to go global in a winner-takes-all economy. The three Chinese high-tech titans are each pursuing investments beyond national borders and original business sectors. Let’s look at the strategies of each of these titans, in order of their place in the BAT league. Buffing Up Baidu Baidu is betting its future squarely on diversifying beyond search and into artificial intelligence technologies for self-driving, smart transport and voice-assisted smart home devices.

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And now, Apple is copying Xiaomi by integrating more revenue-producing, subscription-based entertainment and news content into iPhones—something that China’s Xiaomi phones have had since day one. The Chinese market demands hyperspeed and precise execution—and an eye on superfast growth before profitability. It can be a winner-takes-all market. A few other Chinese companies have emerged in this league besides Xiaomi with its cool smartphones. They include AI-powered news and video apps Toutiao and TikTok, superapp Meituan, and ride-hailing service Didi. This group, the TMD or Toutiao, Meituan, and Didi, echoes China’s BAT companies.

Fair Shot: Rethinking Inequality and How We Earn
by Chris Hughes
Published 20 Feb 2018

Rise of the Robots: Technology and the Threat of a Jobless Future. Basic Books, 2016. Frank, Robert H., and Philip J. Cook. The Winner-Take-All Society: Why the Few at the Top Get So Much More than the Rest of Us. Free Press, 1995. Freeland, Chrystia. “The Rise of the Winner-Take-All Economy.” Reuters, June 20, 2013. http://www.reuters.com/article/us-column-freeland/column-the-rise-of-the-winner-take-all-economy-idUSBRE95J0WL20130620. Friedman, Milton. Capitalism and Freedom. The University of Chicago Press, 1962. Furman, Jason. “Is This Time Different? The Opportunities and Challenges of Artificial Intelligence.” July 7, 2016. https://obamawhitehouse.archives.gov/sites/default/files/page/files/20160707_cea_ai_furman.pdf.

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Facebook would not exist, at least in the form it is today, without major advances in technology, globalized markets that made smartphones possible, or venture capital. Alan Krueger, the former chair of the Council of Economic Advisers and an award-winning economist at Princeton, uses the term “winner-take-all” economy to describe the state we live in today. “Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress,” Krueger argued in a 2013 speech. “The lucky and the talented—and it is often hard to tell the difference—have been doing better and better, while the vast majority has struggled to keep up.”

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Of having parents who didn’t disinherit me but instead sighed and said “do it if you must”? Of having had that sense of must kindled inside me by a professor of art history at Princeton? Of having been let into Princeton in the first place? Saying people get lucky is not a denial that they work hard and deserve positive outcomes. It is a way of acknowledging that in a winner-take-all economy, small, chance encounters—like who you sit next to at a dinner party or who your college roommate is—have a more significant impact than they have ever had before. In some cases, the collections of these small differences can add up to create immense fortunes. Last spring, Mark Zuckerberg returned to our old stomping grounds to give a commencement speech of his own.

Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life
by Alan B. Krueger
Published 3 Jun 2019

Closing Time In his 1930 essay “Economic Possibilities for Our Grandchildren,” John Maynard Keynes posited that a hundred years hence, the main economic problem confronting people will be what to do with our leisure time: Thus for the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.17 Most people are not nearly as free of pressing economic concerns as Keynes had envisioned, partly because of the rise in inequality in our increasingly winner-take-all economy, and that situation is unlikely to change in the next decade when we reach Keynes’s one-hundred-year marker. Still, Keynes’s forecast has merit. As Daniel Hamermesh has observed, “Our ability to purchase and enjoy goods and services has risen much more rapidly than the amount of time available for us to enjoy them.”18 Keynes anticipated that “it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.”

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Research has shown that the labor market consequences of graduating from college in a year when the economy is weak are large, negative, and persistent.22 Another study of MBA students found that graduating from business school in a weak year for stocks reduces the chances of getting a high-paying Wall Street job, while graduating in a bull market boosts the chances of landing a high-paying career in investment banking.23 The study concluded that “investment bankers are largely ‘made’ by circumstance rather than ‘born’ to work on Wall Street.” And, as in the music industry, the effect of luck is amplified in a winner-take-all market in the general economy. Consider CEOs. The pay of top executives relative to their workers has soared since the 1980s. In 1978 the average CEO earned about 18 times as much as the average worker; today the average CEO earns more than 250 times as much.24 As in Alfred Marshall’s time, successful executives can now undertake initiatives and new ventures on a much vaster scale, which has undoubtedly played a role in their outsized compensation.

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else
by Chrystia Freeland
Published 11 Oct 2012

Treasury, crunched the numbers for 2005, they found that even among the top 0.01 percent—true plutocrats who earn at least $10 million a year—wages are far more important than rents. Salary income and business income accounted for 80 percent of their income excluding capital gains and 64 percent including capital gains. And, as with the 1 percent, the shift toward wages has coincided with the emergence of the winner-take-all economy. These figures were a quarter lower in 1979: 61 percent and 46 percent. You can see that change in the life stories of today’s plutocrats. Pete Peterson, for example, is the son of a Greek immigrant who arrived in America at age seventeen and worked his way up to owning a diner in Nebraska; his Blackstone cofounder, Steve Schwarzman, is the son of a Philadelphia-area retailer.

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As another economist, Thomas Lemieux, concluded in a 2006 study of the subject, “Most of the increase in wage inequality between 1973 and 2005 is due to a dramatic increase in the return to post-secondary education.” Moreover, broad measures of the return on education understate the rise of the super-smart in one crucial respect. Just as the winner-take-all economy rewards those at the very top much more richly than those one rung beneath them, a super-elite education has outsize rewards. Any middle-class parent living in a city that is home to a significant community of the 0.1 percent—and that means not just the obvious centers of New York, San Francisco, and London, but also emerging metropolises like Mumbai, Moscow, and Shanghai—knows that the perceived high value of an elite education has prompted a Darwinian pedagogical struggle that begins in nursery school.

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But the reality is more disturbing. In a recent essay, University of Queensland economist John Quiggin calculated that the total first-year class of the Ivy League universities—around twenty-seven thousand—is just under 1 percent of the U.S. college-age population of around three million. And in our education-driven, winner-take-all economy, that 1 percent of eighteen-year-olds has a huge edge in forming the 1 percent as adults. “With those numbers in mind,” Quiggin writes, “the ferocity of the admissions race for elite institutions is unsurprising. Even with the steadily increasing tuition fees, parents and students correctly judge that admission to one of the ‘right’ colleges is a make-or-break life event, far more than a generation ago.”

Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy
by Jonathan Taplin
Published 17 Apr 2017

While Google and Facebook use their market power to extract monopoly rents from advertisers that are often 20 percent higher than market price, Amazon uses its monopsony (a market structure in which only one buyer interacts with many would-be sellers) to force authors, publishers, and booksellers to lower their prices, putting many of them out of business. This was not the decentralization that the founders of the Internet imagined, but ironically it was the very design of the Internet, with a set of global standards that allowed for massive scale, that led to the winner-takes-all economy of the Internet age. In another time, Google, Facebook, and Amazon would have been subject to government strictures and might be half the size they are now because much of their growth has been through acquisition, which would have been prevented by strict antitrust-law enforcement. Running for president in 1912, Woodrow Wilson said, “If monopoly persists, monopoly will always sit at the helm of the government.

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In 2015, in the music business, 80 percent of the revenue came from 1 percent of the products. So Jay Z, Taylor Swift, and a few others got really rich, and most musicians made little or no money from their recordings. It could be that the very nature of search engines, which push the most popular items to the top of the search results, is reinforcing this winner-takes-all economy. Is a tiny percentage of constantly circulating material the rich diversity the Internet has brought us? There is a deeper problem as music moves to an all-streaming format. Because services such as Spotify and YouTube spew out terabytes of data that record companies can analyze, the whole business is becoming ever more data-driven.

The Darwin Economy: Liberty, Competition, and the Common Good
by Robert H. Frank
Published 3 Sep 2011

It’s a matter of simple logic that when people overestimate their chances of winning, too many forsake productive occupations in traditional markets to compete in winner-take-all markets. The Tragedy of the Commons Potential contestants in winner-take-all markets also confront a problem called the tragedy of the commons, an incentive structure that was first invoked to explain overfishing in ocean waters.7 The cod, once abundant in the North Atlantic, saw its population decline by more than 95 percent from overharvesting. The incentives that led to this decline were similar to those that produce excessive entry into many winner-take-all markets. The tragedy of the commons provides a vivid illustration of Darwin’s insight that individual and group interests often diverge sharply.

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One contestant’s good fortune in landing a position in a leading hedge fund is thus largely offset by her rival’s failure to land that same position. So here, too, private incentives result in wasteful overcrowding.8 The tendency to attract excessive contestants is by no means confined to the financial sector. It’s a feature found to some degree in almost every winner-take-all market. As a practical matter, moreover, almost all markets that generate society’s highest incomes are winner-take-all markets. There are typically a few highly leveraged positions atop each profession—Grammywinning recording artists, all-star shortstops, best-selling novelists, Fortune 500 CEOs, major network news anchors, Academy Award–winning actors, popular radio talk show hosts, leading plaintiffs attorneys, and so on.

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So if half the people who are currently jockeying for positions in hedge funds and private equity firms were to leave the financial industry tomorrow, there would still be no shortage of extremely qualified candidates to fill those positions. The resulting gains from having more and better engineers, medical researchers, teachers, and family physicians would more than compensate for any lost value from having fewer contestants in winner-take-all markets. If after-tax incomes in winner-take-all markets were lower, fewer THE GREAT TRADE-OFF? 167 contestants would compete for positions in them. So the desired employment shifts could be encouraged simply by raising tax rates on top earners. Referring to proposals to eliminate preferential tax treatment for hedge fund and private equity managers, a finance professor at Columbia Business School objected that “Private equity is a very important part of our economy,” adding that higher taxes will discourage it.9 Others have characterized the proposals as envy-driven class warfare.

Success and Luck: Good Fortune and the Myth of Meritocracy
by Robert H. Frank
Published 31 Mar 2016

Although the absolute quality of Graf’s play didn’t change much during Seles’s absence, her relative quality improved substantially. A second important feature of winner-take-all markets is that rewards tend to be highly concentrated in the hands of a few top performers. That can occur for many reasons, but most often it’s a consequence of production technologies that extend a given performer’s reach. That’s true, for example, in the music industry, which exhibits both features of winner-take-all markets. As the economist Sherwin Rosen wrote, The market for classical music has never been larger than it is now, yet the number of full-time soloists on any given instrument is on the order of only a few hundred (and much smaller for instruments other than voice, violin, and piano).

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Shame to have ousted your betters thus, Taking ark while the others remained outside! Better for all of us, froward Homunculus, If you’d quietly died! —ALDOUS HUXLEY (1920) CONTENTS Preface xi Acknowledgments xix 1 Write What You Know 1 2 Why Seemingly Trivial Random Events Matter 21 3 How Winner-Take-All Markets Magnify Luck’s Role 40 4 Why the Biggest Winners Are Almost Always Lucky 56 5 Why False Beliefs about Luck and Talent Persist 69 6 The Burden of False Beliefs 86 7 We’re in Luck: A Golden Opportunity 109 8 Being Grateful 128 Appendix 1: Detailed Simulation Results for Chapter 4 151 Appendix 2: Frequently Asked Questions about the Progressive Consumption Tax 158 Notes 173 Index 183 PREFACE How important is luck?

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I’ll also describe several individual case histories illustrating how even the most spectacular success stories could easily have unfolded very diferently. Chance events have always mattered, of course, but in some respects they’ve grown more important in recent decades. One reason for that has been the spread and intensification of what the economist Philip Cook and I have called winner-take-all markets.7 These markets often arise when technology enables the most gifted performers in an arena to extend their reach. Tax advice, for example, was once a quintessentially local undertaking. The best accountants in a town served the biggest clients, the next-best served the next biggest, and so on.

The Four: How Amazon, Apple, Facebook, and Google Divided and Conquered the World
by Scott Galloway
Published 2 Oct 2017

What kind of data do these customers provide? How seamlessly and quickly does it improve the user experience, like auto-populate your destination on Uber, or suggest songs you’ll like on Spotify? Over the last five years, only thirteen in the S&P 500 have outperformed the index each year—evidence of our winner-take-all economy.17 What do most of these firms have in common? They use the peanut-butter-and-chocolate combination of receptors (users) and intelligence (algorithms that track usage to improve the offering). This is tantamount to a car that becomes more valuable with mileage. We now have a Benjamin Button class of products that age in reverse.

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We don’t care how big and dominant Google has become, because our experience of it is small, intimate, and personal. And if it turns those pennies into tens of billions of revenue, and hundreds of billions in shareholder value, we aren’t resentful—as long as it gives us answers and makes our brains seem smarter. It is the winner, and its shareholder benefit stems from the brain’s winner-take-all economy. Google gives the consumer the best answer, for less, more quickly than any organization in history. The brain can’t help but love Google. If Google represents the brain, Amazon is a link between the brain and our acquisitive fingers—our hunter-gatherer instinct to acquire more stuff.

Modern Monopolies: What It Takes to Dominate the 21st Century Economy
by Alex Moazed and Nicholas L. Johnson
Published 30 May 2016

As platforms become more common and disrupt more and more industries, platform dominance will mean that many nonplatform businesses will be left fighting for a smaller and smaller piece of the market. A nonplatform business still can succeed by capturing a slice of another platform’s ecosystem (think Samsung with Android), but controlling the platform is the most sustainable—and most lucrative—way to go. 4 Modern Monopolies Platform Capitalism and the Winner-Take-All Economy Exchange achieves what the medieval alchemists couldn’t: it creates something from nothing. It serves the proverbial free lunch. Swapping goods among people creates value. —David S. Evans, author of Invisible Engines and professor at the Law School at the University of Chicago Because platforms’ margins increase as their networks grow, only one or two platforms will dominate an industry as the market matures.

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Contents Title Page Dedication Prologue: The Burning Platform 1: Platforms Are Eating the World 2: Hayek versus the Machine, or Why Everything You Think You Know about the Twentieth Century Is Wrong 3: The Zero-Marginal-Cost Company 4: Modern Monopolies: Platform Capitalism and the Winner-Take-All Economy 5: Designing a Billion-Dollar Company: How the Core Transaction Explains Tinder’s Success 6: The Visible Hand: The Four Functions of a Platform 7: Let the Network Do the Work 8: Why Platforms Fail, and How to Avoid It Conclusion: How to Spot the Next Big Thing A Word from the Authors Glossary of Platform Terms Acknowledgments Notes Index About Applico About the Authors Copyright MODERN MONOPOLIES.

Fancy Bear Goes Phishing: The Dark History of the Information Age, in Five Extraordinary Hacks
by Scott J. Shapiro

Users won’t buy JOS because applications don’t work with it. But developers won’t adapt their applications to work with JOS because users won’t buy it. Microsoft has won the corporate market and there is no room for runners-up. Operating systems are produced and sold in what the economists Robert Frank and Philip Cook call a Winner Take All market. In a Winner Take All market, competitors vie with one another not simply for a market share, but for the entire market. The winner gets it all, and the rest get nothing, or at least much less than the winner. In the endorsement market, for example, the Olympic gold medalist and the Heisman Trophy winner appear on the cereal box and get the big paycheck, not the silver medalist or the clutch offensive lineman.

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Microsoft can charge monopolistic prices, and engage in other anti- competitive practices, because it knows that most users are locked into its product. Frank and Cook argued that Winner Take All markets exacerbate inequalities. When only a few winners get the lion’s share, the rest fight over the scraps. It is worth noting that of the ten richest people in the world, six are tech billionaires, and two (Bill Gates and Larry Ellison) are founders of operating system companies (Microsoft and Oracle), with a combined wealth of $250 billion. Winner Take All markets for technology exhibit other pathologies. Because they tend to be sticky and non-ergodic, the technologies that win may not be the best-performing ones.

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Windows is the choice of mainstream corporate users and gamers, whereas MacOS caters more to designers, academics, and video editors. Nor does Microsoft control the web server market, which is dominated by Linux. Nevertheless, Windows dominates the market for desktop computing with a 75 percent customer base (vs. 14 percent for MacOS and 2 percent for Linux). Winner Take Most is more precise, but less catchy. Not all Winner Take All markets are alike. The market for operating systems has two special properties. First, the market is “non-ergodic.” A contest is non-ergodic when small differences at the beginning have large impacts later on. Microsoft secured its dominant position because it got to market first. It recognized and capitalized on the personal computer revolution, which triggered a beneficial cycle of adoption and adaptation.

So Good They Can't Ignore You: Why Skills Trump Passion in the Quest for Work You Love
by Cal Newport
Published 17 Sep 2012

When you are acquiring career capital in a field, you can imagine that you are acquiring this capital in a specific type of career capital market. There are two types of these markets: winner-take-all and auction. In a winner-take-all market, there is only one type of career capital available, and lots of different people competing for it. Television writing is a winner-take-all market because all that matters is your ability to write good scripts. That is, the only capital type is your script-writing capability. An auction market, by contrast, is less structured: There are many different types of career capital, and each person might generate a unique collection.

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career capital markets (introduced in Rule #2): When acquiring career capital in a field, you can envision that you’re acquiring this capital in a specific type of career capital market. There are two types of these markets: winner-take-all and auction. In a winner-take-all market, there is only one type of career capital available and lots of different people competing for it. An auction market, by contrast, is less structured: There are many different types of career capital, and each person might generate their own unique collection of this capital. Different markets require different career capital acquisition strategies. In a winner-take-all market, for example, you need to first “crack the code” on how people master the one skill that matters. In an auction market, by contrast, you might simply emphasize rareness in the skill combinations that you create.

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His latest gig was on the stop-motion comedy Glenn Martin, DDS, which he had cocreated with Michael Eisner and had run for two seasons. In other words, there’s no doubt that Alex is an established writer in an industry that allows few through its gates. The question is, how did he do it? How Alex Berger Broke into Hollywood What makes television a hard industry to crack is the fact that it’s a winner-take-all market. There’s only one type of career capital here, the quality of your writing, and there are thousands of hopefuls trying to gain enough of this capital to impress a very small group of buyers. In this respect, however, Alex had an advantage. At Dartmouth College he had been a debater, and a damn good one at that: In 2002 his two-man team arrived at the National Debate Tournament with the country’s highest rank; Alex then went on to win the Best Speaker prize at the tournament.

Forward: Notes on the Future of Our Democracy
by Andrew Yang
Published 15 Nov 2021

But the majority of the real income growth has been experienced by the top sliver of American society. Indeed, more than half of the real income growth in America accrued to just the top 1 percent of Americans since 2009. The bottom 80 percent of Americans own only 8 percent of stock market wealth, and the bottom 48 percent own zero. We are in the midst of the most extreme winner-take-all economy in the history of the world. This disparity might be more tolerable for the average American if costs were stable even as their income and buying power stagnate. However, costs have ballooned for the foundations of American life—education, health-care, and housing costs have gone up and up, even as buying power hasn’t kept pace.

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I learned so much. Thank you.” The most visible figures command enough of an audience to make the industry seem healthy, even while the rank and file disappear. Top journalists continue to make good money; there will just be a lot fewer of them, with others looking up at them. The winner-take-all economy is subsuming the field as it is so many others. If you ask a journalist about the secular disruption, you’re likely to get a response like “Don’t worry, journalism will continue to reinvent itself via a combination of Substack and podcasting”—the kind of response that is the epitome of constructive institutionalism.

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You
by Sangeet Paul Choudary , Marshall W. van Alstyne and Geoffrey G. Parker
Published 27 Mar 2016

This made Airbnb far easier to use and enabled the platform to rapidly outgrow the erstwhile category leader. WHEN ADVANTAGE IS SUSTAINABLE: WINNER-TAKE-ALL MARKETS In business, no victory is permanent—but on occasion, a particular firm is capable of enjoying a dominant position within its industry for a decade or longer. When this happens, we can say that the company has maintained a sustained advantage. This happens most often in a winner-take-all market. This is a market in which specific forces conspire to encourage users to gravitate toward one platform and to abandon others. The four forces that most often characterize winner-take-all markets are supply economies of scale, strong network effects, high multihoming or switching costs, and lack of niche specialization.

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Among the methods that platforms use to compete with one another are preventing multihoming by limiting platform access; fostering innovation, then capturing its value; leveraging the value of information; nurturing partnerships rather than pursuing mergers and acquisitions; platform envelopment; and enhanced platform design. Winner-take-all markets exist in certain platform markets. They are driven by four main factors: supply economies of scale, network effects, multihoming and switching costs, and the lack of niche specialization. In winner-take-all markets, competition is apt to be particularly fierce. 11 POLICY How Platforms Should (and Should Not) Be Regulated In the fall of 2014, the New York City subways were suddenly filled with ads for a business many city residents were just beginning to learn about—Airbnb.

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Virality can attract people to a network, but network effects keep them there. Virality is about stimulating growth among people off-platform, while network effects are about increasing value among people on-platform. Winner-take-all market. A market in which specific forces conspire to encourage users to gravitate toward one platform and to abandon others. The four forces that most often characterize winner-take-all markets are supply economies of scale, strong network effects, high multihoming or switching costs, and lack of niche specialization. NOTES CHAPTER 1: TODAY 1. Bill Gurley, “A Rake Too Far: Optimal Platform Pricing Strategy,” Above the Crowd, April 18, 2013, http://abovethecrowd.com/2013/04/18/a-rake-too-far-optimal-platformpricing-strategy/. 2.

With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough
by Peter Barnes
Published 31 Jul 2014

This is a crucial point. We know that people have different capacities and drives. Some are smarter than others, and some work harder. But those different abilities don’t explain the far greater differences in rewards. Rather, extreme reward differences are driven by the compounding effects of our winner-take-all economy. If extreme inequality is a built-in property of our present economic system, we’ve got some deep thinking to do. For this means that even if we educated our children till the cows came home, inspired or cajoled them to work harder, and got them all jobs, we wouldn’t sustain a large middle class over time.

Infotopia: How Many Minds Produce Knowledge
by Cass R. Sunstein
Published 23 Aug 2006

Traders have been able to bet on the market capitalization that Google will achieve in its initial public offering, the price of Microsoft stock at a future date, and Federal Reserve monetary policy, in addition to the outcomes of a range of U.S. elections.12 For presidential elections—still the most popular markets that IEM operate—traders have recently been permitted to choose from two types of markets. In the “winner-take-all” market, traders win $1 for each “future” in the winning candidate that they own; they receive nothing for shares of the losing candidate. In a “vote-share” market, traders in “candidate futures” win $1 multiplied by the proportion of the popular vote that the candidate receives. Thus, in a winner-take-all market, a “Dukakis future” was worth nothing after the election, whereas in a vote-share market, each Dukakis future paid $0.456. In a winner-take-all market, the market price reflects traders’ perceptions of the likelihood that each candidate will win the election.

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On the day of the vote, dramatic news of pro-Kerry exit polls produced not only a huge switch in the conventional wisdom in the media and on blogs, but also a great deal of volatility in election Money, Prices, and Prediction Markets / 141 markets, with a wild swing in the direction of Senator Kerry at the expense of President Bush. “Suddenly, Kerry’s stock in the Winner Take All market shot up to 70 cents and Bush stock was in the cellar.”79 The rumors affected investors, not just onlookers. Large-scale errors are always possible when apparently relevant news leads numerous investors to buy or sell. Indeed, election day in 2004 may well have been a cascade, with investors responding to one another’s judgments, even though they were based on misleading information.

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants
by Maurice E. Stucke and Ariel Ezrachi
Published 14 May 2020

Why disadvantage our child by having her apply to only two or three universities, based on some ethical principle? And why settle for the local state university? Of course, we know our child can do quite well there. But won’t she have a better chance of withstanding the blows of automation and uncertainty in this winner-take-all economy if she goes to a top-ranked school? In any race to the bottom, we might expect those at the forefront of this frenzy to be the people with the most to fear. So, in the college rankings frenzy, is it the parents in the Appalachian trailer homes who are seeking to push their children up the economic ladder by sending them to Harvard?

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Well-to-do parents are also likely to be well-informed enough to know about the empirical studies that cast considerable doubt on the economic advantage of attending some of these aspirational schools—as we’ll discuss at the end of this chapter. But the primordial need to ensure their children’s survival in a winner-take-all economy triumphs. For the upper-middle class and wealthy, the race begins not in senior year, but much earlier. To increase the odds of admittance to a top college, parents now compete for entry into elite private and magnet public high schools with the understanding that attendance at these schools gives students a competitive edge at securing placement at the top-ranked national universities and liberal arts colleges.

Fulfillment: Winning and Losing in One-Click America
by Alec MacGillis
Published 16 Mar 2021

Put most simply, business activity that used to be dispersed across hundreds of companies large and small, whether in media or retail or finance, was increasingly dominated by a handful of giant firms. As a result, profits and growth opportunities once spread across the country were increasingly flowing to the places where those dominant companies were based. With a winner-take-all economy came winner-take-all places. To the extent that regional inequality and economic concentration were being written about, it was often on their own terms, without relation to one another. In fact, they were intertwined. And as I began to think about this intertwining, it became clear that one of the most natural ways to tell this story was through Amazon, a company that was playing an outsized role in this zero-sum sorting.

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Countless people in town had seen their normal-seeming house soar in value in recent years, and had come to guard that asset fiercely against perceived threats, whether it was a tent encampment or simply an affordable housing development down the street. Seattle had become proof that extreme regional inequality was unhealthy not only for places that were losing out in the winner-take-all economy, but also for those who were the runaway victors. Hyper-prosperity was not only creating the side effects of unaffordability, congestion, and homelessness, but injecting a political poison into the winner cities. The cranes kept going up—there were fifty-nine in the air in April 2019, still the most in the nation.

Exponential: How Accelerating Technology Is Leaving Us Behind and What to Do About It
by Azeem Azhar
Published 6 Sep 2021

I’ll take you from the economy and work, through the geopolitics of trade and conflict, to the broader relationship between citizens and society. First, we’ll explore what exponential technologies do to businesses. During the Exponential Age, technology-driven companies tend to become bigger than was previously thought possible – and traditional companies get left behind. This leads to winner-takes-all markets, in which a few ‘superstar’ companies dominate – with their rivals spiralling into inconsequentiality. An exponential gap emerges – between our existing rules around market power, monopoly, competition and tax, and the newly enormous companies that dominate markets. I’ll also show how the prospects of employees are changing thanks to the emergence of these companies.

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In 1994, Microsoft even targeted the market with its own offering, Microsoft Network. But Berners-Lee’s web became not just dominant but the sole viable information network on the internet, because of network externalities – once a lot of people were there, everyone else had to congregate there too. Wherever there are network effects, there is the chance of a winner-takes-all market. Once a company has established itself as the market leader, it becomes extremely difficult to challenge it. And this effect is being driven by the consumers themselves. It is in the consumers’ own interest to join the biggest network – it is there, after all, that they will get the most value.

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Exponential Age companies are all too aware of the dynamics of this new economy. These firms have come of age in a peculiar environment: in each sector, one company dominates and everybody else gets left behind. As a result, these companies have developed a winner-takes-all mindset that reflects a winner-takes-all market. Consider the management structure of many new superstar companies. The economist W. Brian Arthur was among the first to spot that a shift in organisation design was underway. In 1996, after studying the success of Microsoft and its operating system platforms, he realised that businesses based on network effects operated differently to traditional firms.

Head, Hand, Heart: Why Intelligence Is Over-Rewarded, Manual Workers Matter, and Caregivers Deserve More Respect
by David Goodhart
Published 7 Sep 2020

In his celebrated speech about inequality at Osawatomie, Kansas, President Obama said that “a higher education is the surest route to the middle class.” Left Democrats like Bernie Sanders and Elizabeth Warren go even further and demand “college for all.” Not everyone can be a winner, however you design the game. In some fields such as law, medicine, technology, and some corners of business, “winner-takes-all” markets have provided exceptional rewards to exceptional people—people like Mark Zuckerberg, Jeff Bezos, Elon Musk—who have both high cognitive skills and practical knowledge of something that gives them a big first-mover advantage in new digital markets. Below them is a wider group of highly educated—and highly credentialized—people from top universities who have the intelligence and personality attributes to propel them into the top layer of jobs.

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First, the extent of the privileging of key cognitive employees that has been emerging in big multinational companies. Second, the extent of the spread of graduate-only jobs in recent years. Higher returns on qualification have also been reinforced by other developments in modern economies, such as the so-called war for talent and winner-takes-all markets. Both are the product of technology and global openness. The war for talent was a phrase coined by Steven M. Hankin of the management consultancy McKinsey in 1997 to describe more intense competition among top companies for recruiting and retaining key knowledge workers. The prediction that the modern market economy combined with certain new technologies would generate a new layer of superstars was made a few years ago by two American academics, Robert H.

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But hanging over this potentially benign evolution is the specter of inequality. The knowledge economy will lose many of its rank-and-file soldiers but it will still have an officer corps of highly skilled individuals, both those managing the machines of the fourth industrial revolution and the superstar professionals of the winner-takes-all markets. Soaring corporate pay packages in recent decades have already led to chief executives of the top 500 US companies earning on average 379 times more than their average employee; the figure is 149 times for the top 100 companies in the United Kingdom. 44 Some very sober, mainstream commentators, like Adair Turner, former chairman of the Financial Services Authority in London, worry a great deal about the further deep inequality they see built into the economic trends.

The Scandal of Money
by George Gilder
Published 23 Feb 2016

Importing the Marxian-Malthusian theories of Piketty, Democrats see inequality as stemming from an oppressive and conspiratorial accumulation of wealth. The cause of poverty, the Left tells us, is wealth! Building up faster than wages in accordance with inexorable capitalist logic, the yield of investment exceeds the rate of economic growth. The harvest is an increasingly top-heavy, winner-take-all economy, smothering middle- and lower-class opportunities. President Obama’s friend and counselor Ta-Nehisi Coates, from his perch atop the bestseller lists and at the pinnacle of power in America, denounces the American Dream, in terms that echo Obama’s previous spiritual guide, Pastor Wright in Chicago, as a “genocidal weight of whiteness.”5 Evidence grows that in the United States upward mobility and even geographical mobility are being choked off.

Team Human
by Douglas Rushkoff
Published 22 Jan 2019

The pastures of medieval England were treated as a commons. It wasn’t a free-for-all, but a carefully negotiated and enforced system. People brought their flocks to graze in mutually agreed-upon schedules. Violation of the rules was punished, either with penalties or exclusion. The commons is not a winner-takes-all economy, but an all-take-the-winnings economy. Shared ownership encourages shared responsibility, which in turn engenders a longer-term perspective on business practices. Nothing can be externalized to some “other” player, because everyone is part of the same trust, drinking from the same well. If one’s business activities hurt any other market participant, they undermine the integrity of the marketplace itself.

What's Yours Is Mine: Against the Sharing Economy
by Tom Slee
Published 18 Nov 2015

It’s an issue that other industries face, such as construction, and the root cause is always the same: classification as an independent contractor relieves the hiring company (Uber in this case) from having to pay employment insurance premiums, sick leave, and from having to abide by employment standards. The risk is pushed entirely onto the subcontractor. If cities decide to put taxi regulations to one side for ridesharing companies, many important decisions are handed over to the company. As shown in Chapter 7, technology industries are often a winner-take-all market, where the winner has significant market power, so it matters what kind of company Uber is. It’s a company that has experienced a lot of controversy. Among the most high profile events was a dinner in which Uber executive Emil Michael told journalist Ben Smith that he had considered investigating the private life of Sarah Lacy, a journalist who had criticized Uber.

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As a result, he catches a key aspect of the comparison that Anderson misses: variety in a world subject to “the tyranny of geography” was always supplied by a variety of institutions, each capable of working at different scales. In the world of books, variety was supplied by a combination of chain stores, specialist bookstores who focused on one genre or another (especially in big cities), independent stores, and second-hand stores, whereas in the digital world winner-take-all market structures are more common. By looking only at the big chains and missing these smaller institutions, Anderson guaranteed that his comparisons would show the digital world to be more diverse and full of variety. OPEN DATA Other movements and businesses have been built around digital openness and sharing, such as open access publishing for research journals, open source hardware, and open education (including massively open online courses or “MOOCs”).

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It is more profitable for TV stations in smaller markets to broadcast cheap American shows than it is to broadcast more expensive home-grown material, even in cases where the latter would draw a bigger audience, because cultural producers seek to cover their costs in their home market and typically sell at discounted rates elsewhere.53 To maintain cultural diversity in the face of winner-take-all markets, governments in smaller countries have designed a toolbox of interventions. The contents include production subsidies, broadcast quotas, spending rules, national ownership, and competition policy. In general, such measures have received support from those with a left-leaning outlook. Unfortunately, the open data movement demands that data be provided without borders and in a uniform way: machine processable, available to anyone, and license-free.

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey
Published 12 Oct 2017

We do not dispute the accuracy of the conventional, market-based narrative of rising inequality—as far as it goes. The progress of information technology (IT) has indeed raised relative demand for highly skilled workers while steadily eliminating jobs in the middle of the skill spectrum. IT, combined with globalization, has given rise to winner-take-all markets with huge windfalls for economic superstars. Rising economic opportunities have created more wage dispersion among women, who have then tended to marry those of similar economic status, further exaggerating income differences between the highly skilled and everybody else. Declining employment in traditionally unionized industries has reduced the degree to which workers are able to demand a share of corporate profits.

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Mass immigration expands the ranks of low-skill workers even as demand for them has flagged. People increasingly marry within their social class, reducing the marital pathway to social mobility. The factors contributing to outsized gains at the very top are similarly diverse. They include the rise of “winner-take-all” markets produced by information technology’s network effects as well as globalization’s expansion of relevant market size; a huge run-up in stock prices; continuing growth in the size of big corporations (which has helped to fuel rising CEO pay); and a big drop in the top income tax rate (which has facilitated the use of high compensation as a strategy for attracting top managers, professionals, and executives).

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Drug makers (through patent protection) and healthcare professionals (through occupational licensing) have exaggerated their gains from this rising demand by using the political process to constrict supply. In the rapidly growing information technology sector, the presence of strong network effects in information technology guarantees that some industries will feature “winner take all” markets with high levels of concentration. Lobbyists for strong copyright and patent protection for software have further amplified this dynamic by fortifying the winners’ market power with additional barriers to entry. Meanwhile, network effects have also led to geographic concentration, as highly skilled knowledge workers are increasingly congregating together in “human capital hubs.”

Open: The Progressive Case for Free Trade, Immigration, and Global Capital
by Kimberly Clausing
Published 4 Mar 2019

For example, technological change is an important factor; automation and the rise of computerization and the internet have changed workers lives dramatically. Many other factors are also at work, including evolving social norms, changes in tax policy, the larger role of companies with market power, and the role of “superstars” in winner-take-all markets. Thus, not only are trade and migration barriers likely to generate harmful side effects, but they are also likely to be ineffective in addressing workers’ economic problems. In this fourth part of Open, I put forward a positive policy agenda for responding to the economic stagnation of the middle class and the recent dramatic increases in income inequality.

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Foremost, the benefits of the global economy and technological change have reached too few in the United States. Technological change and global markets do not lead to one uniform destiny; countries can respond to these challenges in a variety of ways. And, as Chapter 2 described, there is more than technology and trade at the root of our problems: market power, winner-take-all markets, tax policy, social norms, and reductions in labor bargaining power all play important roles. The suggestions of Chapters 9 to 11 respond to middle-class economic concerns in ways that go directly to the problems at hand, modernizing economic policy to make it compatible with a twenty-first century economy.

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These changes in our economy make it impossible to go back to the labor market of the 1960s and 1970s. And many more factors are at work in shaping labor outcomes, including evolving social norms, changes in tax policy, a larger role of companies with market power, and the role of “superstars” in winner-take-all markets. This book puts forward a positive policy agenda for responding to the economic stagnation of the middle class and the recent dramatic increases in income inequality. These are not small problems; they require big responses. The agenda outlined in Chapters 9, 10, and 11 is not Democratic or Republican, but brings together pragmatic ideas that are pro-growth, pro-jobs, and pro–middle class.

Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies
by Reid Hoffman and Chris Yeh
Published 14 Apr 2018

Dropping below even 40 percent annual growth is a warning sign for investors. This mindset can be difficult for people to understand. “Why should I risk it all and potentially blow up what is a successful, growing business?” they might rightfully ask. The answer is that blitzscaling businesses tend to play in winner-take-most or winner-take-all markets. The greater risk for a successful, growing business is to move too slowly and allow its competitors to win market leadership and first-scaler advantage. Nokia is a great example of the cost of caution. In 2007, Nokia was the world’s largest and most successful maker of mobile phones, with a market capitalization of just under $99 billion.

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Unlike in the past, when companies needed to offer goods in retail stores or broadcast advertising in order to be visible to customers, today buyers can find whatever they’re looking for on Amazon or other online marketplaces like Alibaba, in app stores, or, when all else fails, by Googling. Because products and services that are already popular will almost always come up first in search results, companies with a competitive advantage can quickly grow to the point where the increasing returns of network effects produce a winner-take-most or winner-take-all market. This also explains why the growth factor of distribution is as or more important to company success as the product itself—without distribution, it is difficult to reach the tipping point. After network effects take hold, the efficiencies enabled by the Networked Age make it easier to sustain the pace of rapid growth.

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The downside, of course, is that the cost of failure is much higher than if you proceeded with deliberate caution and waited for proof before making commitments. But this additional cost can be dwarfed by the potential benefits of achieving first-scaler advantage in a valuable winner-take-most or winner-take-all market. At the Village (hundreds of employees) and City (thousands of employees) stages, the speeds of competing organizations become much more varied. Some will be content with focusing on optimizing for efficiency (scale-up growth), while others will focus on speed (fastscaling) or speed in the face of uncertainty (blitzscaling).

How to Fix Copyright
by William Patry
Published 3 Jan 2012

At the same time, proponents of ever-expanding rights have greatly over-promised what copyright laws can accomplish, and 12 HOW TO FIX COPYRIGHT hide how copyright inflation adversely affects consumers and other sectors of the economy. My conclusions are that copyright laws successfully support investments in winner-take-all markets dominated by superstars, but do not help the majority of authors and artists in making a living. I also conclude that copyright laws have failed to keep up with fundamental changes in markets and technologies: Revenues for the core copyright industries, studied granularly, show a fundamental shift away from the selling of physical objects as possessions—CDs, DVDs and other hard copies—toward a world in which we listen and watch temporary streams of music and movies, and increasingly read books stored elsewhere.

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Pareles observed, the purpose of subjecting yourself to such hardships is to be noticed, and to be noticed among everyone else who is vying to be noticed too. There has always been an overabundance of those who wish to make their livelihood from creative endeavors, relative to the opportunities to do so. As Robert Frank and Philip Cook wrote in their book The Winner-Take-All Society: Winner-take-all markets attract too many contestants in part because of a common human frailty with respect to gambling—namely our tendency to overestimate our chances of winning. Becoming a contestant in a winnertakes-all market entails a decision to pit one’s own skills against a large field of adversaries. An intelligent decision obviously requires a well-informed estimate of the odds of winning.Yet people’s assessments of these odds are notoriously inaccurate.13 We ignore the odds not only because the potential payout is so big but also because of the “optimism bias”: the systematic tendency to overestimate the likelihood of positive outcomes and to 82 HOW TO FIX COPYRIGHT downplay the likelihood of negative events, especially failure.14 The market for creative works, like all markets, is structured to take advantage of this phenomenon.

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It is a zero sum game, where the more people vie for the top, the fewer make it, but the rewards are disproportionately greater.36 Since rare talent must, by definition, be uncommon, there can only be a few who succeed. Those who succeed take it all: superstars get all the product endorsements, the clothing and perfume lines, the magazine covers, the television appearances, and most of our money. The winner-take-all market dominated by superstars also plays out in the argument that superstars need protection from those WHAT ARE COPYRIGHT LAWS SUPPOSED TO DO? 89 imitators who would, by copying from them, try to pull themselves up by pulling the lone geniuses down. If we permit others to copy from lone geniuses, the argument goes that we will have fewer of them.

Design of Business: Why Design Thinking Is the Next Competitive Advantage
by Roger L. Martin
Published 15 Feb 2009

As Target was growing across the Midwest, Walmart was aggressively expanding into the region and beyond. In those days, Ulrich must have grown increasingly weary of hearing about the singular brilliance of Walmart. Walmart was so much bigger and more valuable than its rivals that discount retailing became known as a stereotypical “winner take all” market, where one firm is so strong that it slowly crushes every rival. In other words, Walmart was considered a category killer. Walmart chose, then and now, to worship at the altar of reliability. It is all about the algorithm, from the look and feel of the stores, to the mechanics of the distribution system, to the approach of the buyers and merchandisers, to the strategy for expansion.

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It’s a hell of a competition, but ours is more dependent on innovation, on design, and on quality.” 7 The new heuristic has served Target well. By 2004, Walmart was beginning to bump up against the limits of reliability, and Target for the first time experienced higher same-store sales growth and higher sales per square foot than Walmart. Discount retailing was not, after all, a winner-take-all market. Two giants were duking it out, while two giants of an earlier time—Sears and Kmart, which contributed so much to discount retailing’s dreary image—withered away. Target stayed in the fight through continuous innovation, even as it grew to the scale necessary to become a worthy and meaningful competitor to Walmart.

The AI Economy: Work, Wealth and Welfare in the Robot Age
by Roger Bootle
Published 4 Sep 2019

The straightforward bit is the continuing economization on the demand for labor, most recently thanks mainly to computers and associated developments. The twist is that the communications revolution has caused the proliferation of so-called “winner-takes-all” markets. In traditional markets remuneration tends to be tied to absolute performance, but in “winner-takes-all” markets it is all about relative performance. One of the key factors that limited the extent of winner-takes-all markets has been distance. This has enabled a second- or even third-rate, or worse, provider of a service to stay in business and even prosper. But now, provided that the service in question can be digitized, then distance is no longer a barrier.

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream
by Arianna Huffington
Published 7 Sep 2010

Indeed, the double standard was famously ridiculed by Warren Buffett in 2007 when he noted that his receptionist paid 30 percent of her income in taxes, while he paid only 17.7 percent on his taxable income of $46 million.49 HOMER SIMPSON HAS IT TOO GOOD: SNAPSHOTS FROM THE MIDDLE-CLASS BATTLEFIELD The numbers don’t lie: We increasingly live in a “winner take all” economy. Indeed, we’ve arrived at a point where even Homer Simpson—created as a classic American Everyman character—is now living a middle-class fantasy. After all, how many American middle-class families do you know where the family’s sole breadwinner, a safety inspector at a nuclear power plant, can still comfortably support a family of five on a single income?

The Inner Lives of Markets: How People Shape Them—And They Shape Us
by Tim Sullivan
Published 6 Jun 2016

It might help explain why, in the year 2000, nineteen internet start-ups spent millions buying advertising time during the Super Bowl. It’s also telling that eight of the nineteen—including, famously, Pets.com, with its sock puppet mascot—no longer exist. Ironically, their efforts to signal they had the deep pockets and quality offerings that would allow them to be one of the survivors in the internet’s winner-take-all economy may have helped to drive these big spenders into bankruptcy.10 You might think that such a failure rate would discourage a repeat, but the trend is back: during the 2015 Super Bowl, start-ups, including Wix.com (a company that helps users build websites), and Loctite (a glue maker) spent $4.5 million for each thirty-second spot.11 Whether this all has the desired effect on someone in the market for a new truck or soft drink is another matter.

The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future
by Andrew Yang
Published 2 Apr 2018

They also show stagnant median wages, high corporate profitability, low returns on labor, and high inequality, all of which one would expect if technology and automation were already transforming the economy in fundamental ways. As MIT professor Eryk Brynjolfsson puts it: “People are falling behind because technology is advancing so fast and our skills and our organizations aren’t keeping up.” The winner-take-all economy has set us up for what’s coming. But rather than recognize the extent to which economic value is diverging more and more from human time and labor, we essentially keep pretending it’s the 1970s. We’ve been able to get away with this pretense for a few decades by loading up on debt and cheap money and putting off future obligations.

The Cult of Smart: How Our Broken Education System Perpetuates Social Injustice
by Fredrik Deboer
Published 3 Aug 2020

Instead of applying to specific schools, you submit a single application in which you rank your preferred schools. You are then assigned a school through a weighted lottery system that takes into account your rankings of preference, geographic location, your professional interests, and the need to establish racial and gender diversity at each school. With no more competitive admissions and no more winner-take-all economy, the notion of “good” and “bad” schools, the idea of an elite college, crumbles and falls away. Today a college’s reputation is some strange amalgam of its age, how powerful its selection effects are (only letting in highly talented students is a great way to have successful alumni), its production of research, who is on its faculty, and the status of its graduate programs.

How Will Capitalism End?
by Wolfgang Streeck
Published 8 Nov 2016

As pointed out in Chapter 1 of this book, and partly elaborated in the rest of this introduction, I anchor this condition in a variety of interrelated developments, such as declining growth intensifying distributional conflict; the rising inequality that results from this; vanishing macroeconomic manageability, as manifested in, among other things, steadily growing indebtedness, a pumped-up money supply, and the ever-present possibility of another economic breakdown;19 the suspension of post-war capitalism’s engine of social progress, democracy, and the associated rise of oligarchic rule; the dwindling capacity of governments and the systemic inability of governance to limit the commodification of labour, nature and money; the omnipresence of corruption of all sorts, in response to intensified competition in winner-take-all markets with unlimited opportunities for self-enrichment; the erosion of public infrastructures and collective benefits in the course of commodification and privatization; the failure after 1989 of capitalism’s host nation, the United States, to build and maintain a stable global order; etc., etc.

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In major disciplines, including swimming and track and field, not to mention cycling, one can safely assume that top competitors routinely employ the services of expensive specialists providing them with illegal, performance-enhancing treatment. Doping among athletes competing for ever-increasing sums of prize money and even more lucrative advertising contracts in worldwide winner-take-all markets is accompanied by corruption among officials of international sports associations, some of whom are reported to have been paid huge sums by athletes and their management for suppressing the results of positive doping tests, and by corporations and governments for locating events in places they prefer.

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This is, thirdly, where doping comes in. Doping helps with both coping and hoping, and it takes many forms. Where it involves substance use and abuse, one may distinguish two kinds, performance-enhancing and performance-replacing. Performance-enhancing drugs are taken whenever the rewards of success are high, obviously in the winner-take-all markets of today’s showbusiness, including sports. But they are also used far down the income scale in middle-class professional and occupational life where competitive pressures have been intensifying for decades, as well as in educational institutions where test results may decide a person’s future career and earnings prospects.

Buying Time: The Delayed Crisis of Democratic Capitalism
by Wolfgang Streeck
Published 1 Jan 2013

Schwarz, ‘Tax Competition and Fiscal Democracy’, in Schäfer et al. (eds), Politics in the Age of Austerity. 34 Ganghof, Wer regiert in der Steuerpolitik?, esp. pp. 98–117. 35 Hacker and Pierson (Winner-Take-All Politics) examine in impressive detail the role that tax cuts played in shaping the American ‘winner takes all’ economy and the high public debt that came with it in the 1990s and early 2000s. 36 R. Kuttner, Revolt of the Haves: Tax Rebellions and Hard Times, New York: Simon & Schuster, 1980; I. Martin, The Permanent Tax Revolt: How the Property Tax Transformed American Politics, Stanford, CA: Stanford University Press, 2008; D.

How to Fix the Future: Staying Human in the Digital Age
by Andrew Keen
Published 1 Mar 2018

And if this twenty-first-century city is to be habitable, he said, then these platform owners need to take responsibility for the impact of their products on their users. Can the Internet Save the World? In The Internet Is Not the Answer, I argued that the digital revolution, combined with the network effect of a winner-take-all economy, has created a Big Tech concentration of power that dwarfs Big Banks, Big Oil, or Big Pharma in its size and significance. It’s a much more lavish meal than just Facebook swallowing journalism, I suggested. Corporations like Google and Facebook were once known, rather quaintly, as “internet” companies.

Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy
by Erik Brynjolfsson
Published 23 Jan 2012

Each city might have its own local stars, with a few top performers touring nationally, but even the best singer in the nation could reach only a relatively small fraction of the potential listening audience. Once music could be recorded and distributed at a very low marginal cost, however, a small number of top performers could capture the majority of revenues in every market, from classical music’s Yo-Yo Ma to pop’s Lady Gaga. Economists Robert Frank and Philip Cook documented how winner-take-all markets have proliferated as technology transformed not only recorded music but also software, drama, sports, and every other industry that can be transmitted as digital bits. This trend has accelerated as more of the economy is based on software, either implicitly or explicitly. As we discussed in our 2008 Harvard Business Review article, digital technologies make it possible to replicate not only bits but also processes.

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It)
by Salim Ismail and Yuri van Geest
Published 17 Oct 2014

A good way of looking at this is that when you move from point A to point B, you can then see point C. But you can’t see point C from point A. Iteration/experimentation is the only way. As Eric Ries explains, “The modern rule of competition is whoever learns fastest, wins.” Most digital markets are winner-takes-all markets due to network effects. This makes a culture of continuous experimentation even more important. The Martin Trust Center for MIT Entrepreneurship uses a Lean Startup process for corporate innovation that is similar to the one used at Adobe. It’s called the 5x5x5x5 method (54). Five corporate teams with five complementary team members compete for five weeks (one to two days a week), spending no more than $5,000 to produce one innovation.

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In some countries, banks are getting into the travel business. We’re also seeing travel agents moving into insurance and retailers into media (Amazon, Netflix). As a result, whatever business you are in, chances are your competitors are not what they used to be. A final outcome of this trend is that we seem to be entering an era of “winner-takes-all” markets. There’s really only one search engine (Google), one auction site (eBay) and one e-commerce site (Amazon). Network effects and customer experience lock-in seem to be at the root of this fundamental change in the nature of competition. 2. Drive To Demonetization One of the most important—and least celebrated—achievements of the Internet during the last decade was that it cut the marginal cost of marketing and sales to nearly zero.

Thieves of State: Why Corruption Threatens Global Security
by Sarah Chayes
Published 19 Jan 2015

Nigeria’s manufacturing, like Egypt’s, has also largely died out—victim, say residents, of privatization to cronies under pressure from the IMF, and customs and tariff regimes designed for members of the kleptocratic networks to work around. The Kano State civil servant took me on a tour of shuttered factories and warehouses: Bata shoes, an electronics factory, despairingly empty.* The result of this oil “monoculture” is a winner-take-all economy, in which unemployment and penury rise steadily, while political office guarantees a space at the Nigerian version of Tunisia’s feeding-trough state. The official salary of a senator tops one million U.S. dollars per year. With such fabulous sums in play, Nigerian politics has become a blood sport.

The Precariat: The New Dangerous Class
by Guy Standing
Published 27 Feb 2011

At present, the average lifetime monetary gain from going to a college or university is substantial – £200,000 for men in the United Kingdom (Browne, 2010). Imposing high fees may thus seem fair. But fees risk marginalising university subjects that offer no financial return and ignore the fact that the return is a mean average. In a market society, winner-takes-all markets proliferate, which is why income differentials have grown way beyond what would be justifiable on productivity grounds. A shrinking number of students gain the high income returns that produce the mean average. More will gain jobs paying well below the mean. 68 THE PRECARIAT Now factor in what is happening in the labour market.

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Scott McNealy, chairman of Sun Microsystems and an investor in the Western Governors University, which delivers degrees online, argued that teachers should re-position themselves as ‘coaches, not content creators’, customising materials to students while piping in others’ superior teaching. This commodification and standardisation is cheapening education, denuding the profession of its integrity and eroding the passing on of informal knowledge. It is strengthening winner-takes-all markets and accelerating the dismantling of an occupational community. A market in human capital will increase emphasis on celebrity teachers and universities, and favour norms and conventional wisdom. The Philistines are not at the gates; they are inside them. International financial institutions such as the World Bank demand that ‘inappropriate curricula’ unrelated to the economy should be removed.

The Weightless World: Strategies for Managing the Digital Economy
by Diane Coyle
Published 29 Oct 1998

A global brand will make its manufacturer far, far more money than a very similar product that does not achieve the same recognition in the market place. That means that there are superstar product designers, engineers, advertising executives and so on — anybody with a proven record of success will become a celebrity in his or her own field. The authors write: ‘The winner-take-all markets ... have become an increasingly important feature of modern economic life. They have permeated law, journalism, consulting, medicine, investment banking, corporate management, publishing, design, fashion, even the hallowed halls of academe.’ (The two professors modestly omit to mention that they fall into this last category following the success of their book.)

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Here I part company sharply with Professors Frank and Cook who go on to argue that this is inefficient in economic terms. They make a series of The Weightless World 116 arguments. First, superstar economies generate income inequality, which is a social bad. True, but not necessarily an economic inefficiency. Secondly, winner-takes-all markets cause effort to be mis-allocated. For everybody wants to be a superstar and therefore too many people pile into professions where the winner-takes-all conditions apply. They write: ‘In increasing numbers our best and brightest graduates pursue top positions in law, finance, consulting and other over-crowded arenas, in the process forsaking careers in engineering, manufacturing, civil service, teaching and other occupations in which an infusion of additional talent would yield greater benefit to society’.

The Upside of Inequality
by Edward Conard
Published 1 Sep 2016

It is no surprise, then, to find that as the world’s population has grown, income inequality has grown around the world.11 A more prosperous world values and rewards innovations—a new song or movie, a new technology, or a new insight—more highly than a less prosperous world. That’s a good thing. The growing income of the 1 percent is the result of simple multiplication, not a deduction from the pockets of the less successful. Were it the case that the world was becoming a less competitive “winner take all” economy, as economist Robert Frank postulates, or an increasingly concentrated “superstar economy” with relatively fewer “box office” successes, as economist Sherwin Rosen contends, we would expect the success of the 1 percent to be growing even faster than the success of the most successful corporations.12 That hasn’t been the case.

The World Beyond Your Head: On Becoming an Individual in an Age of Distraction
by Matthew B. Crawford
Published 29 Mar 2015

What is demanded is an all-purpose intelligence, the kind one is certified to have by admission to an elite university, not anything in particular that you might have learned along the way. You have to be ready to reinvent yourself at any time, like a good democratic Übermensch. And while in Calvin’s time the threat of damnation might have been dismissed by some as a mere superstition, with our winner-take-all economy the risk of damnation has acquired real teeth. There is a real chance that you may get stuck at the bottom. MOBILITY AND THE DEMOCRATIC SOCIAL CONDITION When Tocqueville came to America in the 1830s, he was struck by our “democratic social condition,” in which “new families are constantly springing up, others are constantly falling away, and all that remain change their condition.”

Lessons from the Titans: What Companies in the New Economy Can Learn from the Great Industrial Giants to Drive Sustainable Success
by Scott Davis , Carter Copeland and Rob Wertheimer
Published 13 Jul 2020

And now a recession has put many businesses on the brink of collapse, even businesses that were not all that long ago thought of as invincible. In the stock market, investors have spent much of the last decade bidding up technology giants to levels that make sense only if these firms face limited competition and amazing profitability for decades. Market share has become the primary goal in a winner-take-all economy. Far beyond Silicon Valley, companies have been spending heavily on growth and paying little attention to how they’ll actually make money once they get there. With all the talk about disruption and market dominance, you might think the laws of business had been repealed. It’s as if the hard-learned lessons from the 2008–2009 financial crisis have already been long forgotten, even as we encounter a new crisis that could have even deeper impacts.

Golden Gates: Fighting for Housing in America
by Conor Dougherty
Published 18 Feb 2020

Homelessness is increasing, eviction displaces about a million households a year, and about four million people spend at least three hours commuting to and from work. One need only look out an airplane window to see that this has nothing to do with a lack of space. It’s the concentration of opportunity and the rising cost of being near it. It says much about today’s winner-take-all economy that many of the cities with the most glaring epidemics of homelessness are growing technology and finance centers where good-paying jobs are plentiful and industries of the future are on the rise. California, home of the nation’s worst housing crisis, has the dubious distinction of having somehow managed to produce some of the highest wages in America as well as the highest state poverty rate once the cost of housing is figured in.

The End of Ownership: Personal Property in the Digital Economy
by Aaron Perzanowski and Jason Schultz
Published 4 Nov 2016

Amy Calhoun and James English, “Library Simplified” (presentation delivered at ALA 2015, San Francisco, CA, June 27, 2015), http://www.slideshare.net/jamesenglish/library-simplified-ala, accessed November 20, 2015. 19. Ava Seave, “Are Digital Libraries a ‘Winner-Takes-All’ Market? OverDrive Hopes So,” Forbes, November 18, 2013, http://www.forbes.com/sites/avaseave/2013/11/18/are-digital-libraries-a-winner-takes-all-market-overdrive-hopes-so/, accessed August 6, 2015. 20. While there hasn’t been a documented case of a library patron having their ebook access cut off, similar situations have arisen for Amazon ebook purchasers. See, e.g., Mark King, “Amazon Wipes Customer’s Kindle and Deletes Account with No Explanation,” Guardian (UK), October 22, 2012, http://www.theguardian.com/money/2012/oct/22/amazon-wipes-customers-kindle-deletes-account, accessed August 6, 2015. 21.

Break Through: Why We Can't Leave Saving the Planet to Environmentalists
by Michael Shellenberger and Ted Nordhaus
Published 10 Mar 2009

Like environmentalists in Brazil who advocate sustainable development in the forest while turning a blind eye to the favelas of São Paulo, environmental justice advocates, with the blessings of mainstream environmentalists, focus on diesel buses, oil refineries, and asthma in poor communities that are faced with much larger crises, from joblessness to poor schools to the lack of affordable health care. While there is little evidence of a conspiracy to poison nonwhite Americans with toxic pollutants, Americans living in low-income, predominantly nonwhite communities disproportionately suffer a variety of poor health outcomes. In a winner-take-all economy, such outcomes are almost inevitable. Poor Americans are more likely to live in polluted urban areas and in close proximity to polluting industrial facilities, highways, and bus and truck routes. They are also much more likely to lack adequate health care and housing, to work in industries with high occupational health hazards, and to suffer disproportionately from a variety of nonenvironmental health ills.

System Error: Where Big Tech Went Wrong and How We Can Reboot
by Rob Reich , Mehran Sahami and Jeremy M. Weinstein
Published 6 Sep 2021

Yet we must also remember that the distrust in democracy is partly a product of the rise of technologists. The recommendation systems and algorithmic curation of the private platforms that constitute the infrastructure of our digital public sphere have contributed to polarization and supercharged the spread of misinformation. And the tech industry has contributed to a winner-take-all economy, which has in turn widened wealth and income inequality, phenomena that social scientists have repeatedly demonstrated undermine confidence in democratic institutions. We believe that democracy must be defended. Democracies are committed, at least in principle, to the noble and enduring values of individual freedom and equality.

Rich White Men: What It Takes to Uproot the Old Boys' Club and Transform America
by Garrett Neiman
Published 19 Jun 2023

Perhaps because of my previously undiagnosed anxiety and longstanding overwork habits, I have had chronic neck and shoulder pain since college. I’ve needed to spend significant time in physical therapy, and I now complete a stretching and exercise regimen every morning, which has made the pain much more manageable; I also take short breaks throughout the day to help keep my muscles from tightening up. In America’s winner-take-all-economy, I’ve experienced how my physical ailments can sometimes be characterized as weaknesses and used to justify that I deserve less in a “survival of the fittest” culture. And as I went deeper into equity work, I initially minimized my chronic pain, thinking it was trivial in comparison to what marginalized populations endured and that it would seem entitled for me to request anything more for myself.

The Fourth Industrial Revolution
by Klaus Schwab
Published 11 Jan 2016

Today, a middle-class job no longer guarantees a middle-class lifestyle, and over the past 20 years, the four traditional attributes of middle-class status (education, health, pensions and house ownership) have performed worse than inflation. In the US and the UK, education is now priced as a luxury. A winner-takes-all market economy, to which the middle-class has increasingly limited access, may percolate into democratic malaise and dereliction which compound social challenges. 3.4.2 Community From a broad societal standpoint, one of the greatest (and most observable) effects of digitization is the emergence of the “me-centred” society – a process of individuation and emergence of new forms of belonging and community.

Machine, Platform, Crowd: Harnessing Our Digital Future
by Andrew McAfee and Erik Brynjolfsson
Published 26 Jun 2017

These users will be “locked in,” as economists say. By definition, when network effects are important, larger networks are more attractive to new users than smaller networks, so whichever network is largest will have the easiest time attracting even more users, extending its advantage. In other words, there’s a tendency toward winner-take-all markets when network effects are strong. This phenomenon creates yet another incentive for lowering prices, at least initially, when building a networked business. All of these effects can interact, so it can be a delicate balancing act to provide just the right incentives for both sides of the market.

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victory, 17 p53 kinase study, 116–17 recipes invented by, 118 Waze, 162, 218 Wealthfront, 91 wealth management, 91; See also financial services web, See World Wide Web Web 2.0, 242 Wiener, Norbert, 31 Werbos, Paul, 73 WhatsApp, 140–42, 213, 265–66 Whitehead, Alfred North, 69 “Why Fintech Won’t Kill Banks” (Economist article), 202 Wikipedia, 43, 234–35, 246–49, 260 Williams, Walter, 263 Williamson, Oliver E., 313 Wilson, Mark, 118n Wilson, Timothy DeCamp, 45 Windows Phone, 167–68 Windsor, Richard, 203 wine, 38–39 winner-take-all markets, 217 women, automated trading and, 269 World Wide Web and business process reengineering, 33 as crowd-generated library, 231–32 and enterprise systems, 34 expansion of Internet’s capabilities, 33–34 as platform, 138 Wright, Gavin, 21 Wright, Robert, 229–31, 271 writing, AI-generated, 121 Wu, D.

Geek Heresy: Rescuing Social Change From the Cult of Technology
by Kentaro Toyama
Published 25 May 2015

There is a growing population of writers, and publishing is being commoditized.5 On the other hand, the books that receive widespread attention and land on best seller lists are a dwindling proportion of the total. The first trend is sometimes called “the long tail”; the second represents a “winner-take-all” economy.6 Commentators tend to highlight one or the other of these phenomena, but both are happening at once. Together they cause the shrinking middle that is the hallmark of any industry – music, movies, manufacturing – whose product can be replicated and distributed cheaply. Indeed, in the book business it is widely acknowledged that fewer and fewer authors are able to make a living through writing.

The Great Divide: Unequal Societies and What We Can Do About Them
by Joseph E. Stiglitz
Published 15 Mar 2015

But it is not an easy matter to assess how the time savings implied by online shopping, or the cost savings that might result from increased competition (owing to greater ease of price comparison online), affects our standard of living. Two things should be clear. First, the profitability of an innovation may not be a good measure of its net contribution to our standard of living. In our winner-takes-all economy, an innovator who develops a better Web site for online dog-food purchases and deliveries may attract everyone around the world who uses the Internet to order dog food, making enormous profits in the process. But without the delivery service, much of those profits simply would have gone to others.

Information Doesn't Want to Be Free: Laws for the Internet Age
by Cory Doctorow , Amanda Palmer and Neil Gaiman
Published 18 Nov 2014

Every time you sold a ten-dollar book through Walmart, that would be ten dollars’ worth of investment in this Walmart ecosystem your readers would feel beholden to, even if you and all their other favorite authors were later offered a better deal at Barnes and Noble (meanwhile, you’d only get fifty cents of that ten dollars in royalties, if that!). It’s easy to understand why Walmart would love this—it creates a winner-takes-all market, where a small advantage quickly grows into an unbridgeable gap. The question is, why should authors or publishers want to have anything to do with a scheme like this? Digital locks are roach motels: copyrighted works check in, but they don’t check out. Creators and investors lose control of their business—they become commodity suppliers for a distribution channel that calls all the shots.

The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future
by Jeff Booth
Published 14 Jan 2020

A telephone system is a good example: if I am the only one with a phone, the service is useless because I cannot call anyone. With each additional user, the service becomes more valuable to all users, which in turn creates a positive feedback loop of value leading to exponential growth. Designing a platform to take advantage of strong network effects creates lock-in and winner-take-all markets. The Internet itself has one of the strongest network effects, and consequently so do many of the top companies built on it. Ironically, network effects, which were supposed to make the Internet the great equalizer as it redistributed power away from monopolies, have ended up concentrating even more power in the hands of very few.

Evil Geniuses: The Unmaking of America: A Recent History
by Kurt Andersen
Published 14 Sep 2020

The 1960s had triggered that first nostalgia wave as a soothing counterreaction. A generation later the unpleasant economic changes of the 1980s and ’90s made us retreat even deeper into our havens of the recycled and reassuringly old as a kind of national cultural self-medication. The unavoidable newness disoriented many people—the brutal winners-take-all economy and PCs evolving to supercomputers in every pocket all connected to one another, the easily graspable Cold War replaced by the confusing rise of China and militant Islamism, the influx of immigrants—take your pick. Just as Americans who came of age from the 1960s and after tended to be Peter Pans, fearing or resisting adulthood like no previous generations, trying to stay forever young, we also started fearing the future and resisting the new in general.

Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence
by Jerry Kaplan
Published 3 Aug 2015

A 2005 University of Pennsylvania research report discusses how grocery store loyalty card programs offer differently valued discount coupons at checkout depending on such factors as how brand-loyal you appear to be.5 In other words, if you were inclined to buy the item anyway, why almost literally give away the store? The problem here is that all this wonderful laissez-faire is a prelude to à prendre ou à laisser—take it or leave it.6 The free flow of information around the Internet creates winner-take-all markets, and online retailing is no exception.7 Before the Internet, there were two points of friction that enabled a retailing market vigorous enough to profitably accommodate multiple sellers of identical goods. The first was information. How much more difficult was it to comparison shop, when you had to drive to a competitor’s store or search for their ads in the local newspaper, hoping to find the same item?

The Global Auction: The Broken Promises of Education, Jobs, and Incomes
by Phillip Brown , Hugh Lauder and David Ashton
Published 3 Nov 2010

Gary Becker, awarded a Nobel Prize for his work on human capital, has highlighted what he sees as the “upside of income inequality,” arguing that the earning gap has widened “because the demand for educated and other skilled persons is growing.”27 These inequalities, he argues, reflect the new realities of a global economy that offer exceptional rewards to those with scarce skills, knowledge, and talent at the same time as penalizing those with poor marketable skills or mediocre records of performance. In The Winner-Takes-All Society, Frank and Cook are less sanguine about widening income inequalities in America, as they 122 The Global Auction believe them to be unjust and a cause of economic inefficiency. They explain these inequalities in terms of winner-takes-all markets because they make “the most productive individuals more valuable, and at the same time have led to more open bidding for their services.”28 In line with Becker, they take for granted that the market value of the most talented is worth more due of their contribution to productivity. The problem with this approach is that it continues to peddle the view that those who receive huge salaries deserve them, and the only thing stopping other people from doing the same thing is their failure to invest in their employability or to up their game.

Deep Work: Rules for Focused Success in a Distracted World
by Cal Newport
Published 5 Jan 2016

This same trend holds for the growing number of fields where technology makes productive remote work possible—consulting, marketing, writing, design, and so on. Once the talent market is made universally accessible, those at the peak of the market thrive while the rest suffer. In a seminal 1981 paper, the economist Sherwin Rosen worked out the mathematics behind these “winner-take-all” markets. One of his key insights was to explicitly model talent—labeled, innocuously, with the variable q in his formulas—as a factor with “imperfect substitution,” which Rosen explains as follows: “Hearing a succession of mediocre singers does not add up to a single outstanding performance.” In other words, talent is not a commodity you can buy in bulk and combine to reach the needed levels: There’s a premium to being the best.

The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment
by Guy Spier
Published 8 Sep 2014

I had done a lot of research into Nike and had looked at the impact of its sponsorship on tennis and soccer. Instead of telling Shai that I thought K-Swiss was an also-ran in the sneaker business, I suggested that he produce a list of the top 20 tennis players, see who sponsored them, then estimate which of those players attracted the most viewers in what is typically a winner-take-all market. In the process, he discovered that K-Swiss had only one player on the list, while Nike had six or seven—an indication that K-Swiss faced an all but insuperable challenge to win market share away from Nike. At no point did we discuss whether Shai already owned the stock or was thinking of buying it.

WTF?: What's the Future and Why It's Up to Us
by Tim O'Reilly
Published 9 Oct 2017

And when the market gets excited, those people get paid in a currency that appreciates at a rate far in excess of anything possible in the real economy. The amount of supermoney created out of thin air simply by issuing new options to employees is staggering. In 2015, for instance, Google’s stock-based compensation was $5.2 billion. The ability to print supermoney is proportional to your size, further accelerating the winner-takes-all economy. For a company the size of Google, whose market capitalization at the end of that year was more than $500 billion, that $5.2 billion in stock compensation represented only a 1% dilution of existing shareholders. For a smaller company, like Salesforce, with a market capitalization closer to $50 billion, 1% would only be $500 million—so Salesforce can afford only a tenth as much to hire engineers even though it has a third as many employees as Google.

Matchmakers: The New Economics of Multisided Platforms
by David S. Evans and Richard Schmalensee
Published 23 May 2016

Many writers on business strategy took this apparent lesson to heart and emphasized the importance of first-mover advantages in industries with network effects.5 They drew two conclusions. The first was that network effects meant that one firm, or standard, would control the market, since bigger was always better in the eyes of consumers. These were, therefore, winner-take-all markets. The second was that, if you wanted to be the winner who took all, you had better start first and keep your lead. Since direct network effects would magnify the effects of even the slightest of leads, there’s always a first-mover advantage. One can see the influence of this work from a Google Ngram that shows the frequency of these phrases in books published after 1950.

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All
by Martin Sandbu
Published 15 Jun 2020

Martin Sandbu, “How Blue-Collar Aristocracy Was Laid Low,” Financial Times, 19 November 2018, https://www.ft.com/content/b336e428-e8e5-11e8-a34c-663b3f553b35. 10. Krauss, “Texas Oil Fields.” 11. Martin Sandbu, “Place and Prosperity,” Financial Times, 16 December 2016, https://www.ft.com/content/63f71020-c21f-11e6-9bca-2b93a6856354. 12. Robert Frank and Philip Cook, “Winner-Take-All Markets,” Studies in Microeconomics 1, no. 2 (December 2013): 131–54, https://doi.org/10.1177/2321022213501254. 13. Jason Furman, “Forms and Sources of Inequality in the United States,” VoxEU, 17 March 2016, https://voxeu.org/article/forms-and-sources-inequality-united-states. 14. Ben Ansell and David Adler, “Brexit and the Politics of Housing in Britain,” Political Quarterly 90, no. 52 (April 2019): 105–16, https://doi.org/10.1111/1467-923X.12621. 15.

Starstruck: The Business of Celebrity
by Currid
Published 9 Nov 2010

Galenson’s research shows that Richter is the number one artist whose artwork consistently sells for over $1 million. He does not, however, reach the auction price heights of Hirst or Koons. So while Richter will certainly be considered one of the greatest artists of his time, he is not a celebrity who reaps the rewards of the winner-takes-all market. Richter’s work is revered by those who know art, the way a Booker Prize winner is lauded by book readers while the masses read Katie Price’s latest biography. As Galenson remarks, “Richter has a massive influence on young artists, even if not a household name.” 20. “Postwar & Contemporary Art at Christie’s Totals $430.8 Million,” editorial, Antiques and the Arts, May 20, 2008, antiquesandthearts.com/Antiques/AuctionWatch/ 2008-05-20__13-38-28.html. 21.

Dollars and Sense: How We Misthink Money and How to Spend Smarter
by Dr. Dan Ariely and Jeff Kreisler
Published 7 Nov 2017

I figure they’re more likely to learn their lesson that way, and moreover, I have to keep my reputation.” In Dan’s game/experiment/scam, the effect of sunk costs quickly turned his students’/subjects’/marks’ potential 95-euro gain (100 euro minus the 5-euro starting bid) into a 490-euro loss. This is just like a contest between two companies in a winner-takes-all market. In general, one company will get all the sales or at least the vast majority, and the other will get nothing. Every quarter, each company must decide whether to invest more in research and development and advertising or to give up the competitive project. At some point, it should be clear that if the two companies perpetually try to outbid each other, they’ll both end up losing lots of money.

The Impulse Society: America in the Age of Instant Gratification
by Paul Roberts
Published 1 Sep 2014

Nor can we any longer persuade ourselves that our market and political systems will somehow reform themselves: the system is so broken that we no longer have the luxury of denial and apathy. More and more of us recognize that the pessimistic story lines that make the Impulse Society seem so intractable—the entrenched political dysfunction, the permanently myopic winner-take-all market, the chronic self-absorption of individuals—are themselves part of the Impulse Society, a meta brand that has made real reform seem impossible. But more of us see through this brand and know that reform is possible. Now, even as technocrats and academics and a few reform-minded politicians and businesspeople grapple with the myopia of the political system and the business world, the rest of us need to put that knowledge into action and step into the fray.

Social Class in the 21st Century
by Mike Savage
Published 5 Nov 2015

This is because when there is a highly competitive education system and labour market, it is those who can maximize every possible advantage and who start from the most advantaged positions who are best able to succeed within this meritocratic structure. We see this syndrome operating very actively in the search for ‘talent’ embarked upon by leading companies and organizations acting to ‘hothouse’ their star performers in ‘Winner takes all’ markets. Meritocracy is not a curb to escalating inequality; it is actually implicated within it. In this respect, conventional images of George Osborne and David Cameron in their Bullingdon Club Oxford days, with the implication that the closed, old-fashioned elite world continues to look after its own, are misleading.

The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing
by Michael J. Mauboussin
Published 14 Jul 2012

In the era before recording technology was developed, the singers would have earned a comparable sum from their concerts, with the superior singer perhaps earning a modest premium consistent with the difference in skill. But once recording technology was introduced, consumers would no longer have to settle for the lesser of the two and would buy the record of the better singer almost every time. So her earnings would soar relative to her rival. Despite the similarity of talent, this becomes a winner-take-all market. In their book The Winner-Take-All Society, Robert Frank and Philip Cook suggest that increased competition for talent is another factor that creates outsized pay for top performers. Frank offers the example of a board of directors that must select between two candidates to become the next CEO of a company that earns $10 billion a year in profits.

An Economist Gets Lunch: New Rules for Everyday Foodies
by Tyler Cowen
Published 11 Apr 2012

I don’t use the plastic bowl or that whisk or that CorningWare tray. I would throw them away, except that my wife does not like it when I throw things away. Second, most people have a few favorite items which they use again and again and again, until they wear them out and have to buy new ones. Most kitchens function as a “winner-take-all” market, where a few items receive all the use and most are neglected and left alone. For me, the winning items are a very-good-at-conducting-heat frying pan, a wok, a large blue casserole, a small pot for cooking rice, an all-purpose Cuisinart/spice grinder, a large boiling pot for pasta, and a baking tray.

Cultural Backlash: Trump, Brexit, and Authoritarian Populism
by Pippa Norris and Ronald Inglehart
Published 31 Dec 2018

Protests have mobilized enormous crowds; for example, the January 2018 women’s march on the anniversary of Trump’s inauguration drew an estimated 2.67 million people onto the streets across America.40 What matters for reversing effective action, however, is whether these energies can be transferred from the streets and Twitter feeds to the ballot box and elected office. Reducing Economic Inequality Western societies have increasingly become winner-take-all economies dominated by a small minority, while the overwhelming majority have precarious jobs. If left to market forces, this tendency will prevail. But government can be a countervailing force that reallocates resources for the benefit of society as a whole. In recent decades, neo-liberal policies of deregulation and austerity cuts in social welfare have mainly had the opposite effect, fueling growing insecurity.

The Economics of Enough: How to Run the Economy as if the Future Matters
by Diane Coyle
Published 21 Feb 2011

Demand to see the top rank feeds on itself. Modern technologies also amplify the potential reach of talented people—the best performers are in demand not only for live performance but for CDs and downloads too. Both technology and globalization increase hugely the potential demand for talent. These “winner take all” markets have spread superstar pay to many other sectors of the economy, outside sport and the performing arts where they were originally observed.35 Moreover, this trend means that the increase in inequality due to skills and technology has what is known as a “fractal” character, which means that it is occurring within categories as well as in the overall income distribution: top lawyers’ pay has risen relative to those on low incomes; but the top top lawyers have pulled further ahead of the average top lawyer too.36 So to sum up, structural changes in the economy driven by new technologies are the fundamental driver of greater inequality, in much the same way that the wave of innovation of early capitalism in the nineteenth century led to great inequality until the workforce as a whole developed the new skills that were needed.

Philanthrocapitalism
by Matthew Bishop , Michael Green and Bill Clinton
Published 29 Sep 2008

Frank and Philip Cook observe in their 1996 book, The Winner-Take-All Society, new technology, globalization, and market economics have changed the structure of many industries in such a way that their star performers now earn vastly more than the average performer. As they explain, these are markets where “the value of what gets produced in them often depends on the efforts of only a small number of top performers, who are paid accordingly.” A booming world economy combined with winner-take-all markets resulted in an increase in the number of billionaires that might have shocked even Carnegie. In 2009, even after the financial crisis, Forbes magazine’s annual survey of the richest people in the world listed 793 billionaires. When Forbes first entered the rich-list business in 1982 with an annual ranking of America’s 400 wealthiest families, the threshold for inclusion was a net worth of $90 million.

Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy
by Robert W. McChesney
Published 5 Mar 2013

Wired’s Anderson puts the matter succinctly: “Monopolies are actually even more likely in highly networked markets like the online world. The dark side of network effects is that rich nodes get richer. Metcalfe’s law, which states that the value of a network increases in proportion to the square of connections, creates winner-take-all markets, where the gap between the number one and number two players is typically large and growing.”12 Bob Metcalfe, inventor of the Ethernet protocol that wires computers together, regarded the network effect as so prevalent that he formulated the law that goes by his name: the usefulness of a network increases at an accelerating rate as you add each new person to it.13 Google search is an example; the quality of its algorithm improves with more users, leaving other search engines with a less effective and attractive product.

Work Rules!: Insights From Inside Google That Will Transform How You Live and Lead
by Laszlo Bock
Published 31 Mar 2015

* The same pattern holds for Oscars, Man Booker Prize nominations, Pulitzer Prize nominations, Rolling Stone Top 500 Songs, and thirty-six other awards. † The same pattern holds in US state and Canadian provincial legislatures, the parliaments of Denmark, Estonia, Finland, Ireland, the Netherlands, and the United Kingdom, and in the New Zealand legislature. lv Clear exceptions include Frank and Cook’s “winner-take-all markets,” where the differences between the very best people and the next best are more readily observable, like professional sports, music, or acting. In those markets you see top pay in the tens of millions. And it follows a power law distribution. The Screen Actors Guild (SAG), for example, hasn’t released member compensation statistics since 2008, but it’s possible to piece together the distribution from various articles.

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century
by Torben Iversen and David Soskice
Published 5 Feb 2019

While still a hypothetical question, what would happen if the substitution effects of new technology affected a majority? This, and not whether globalization will undermine the power of the nation-state or suborn democracy, strikes us as the more salient political question to ask about the future. We first note that even if winner-take-all markets become more pervasive, this does not eliminate the need for a large-scale higher education system. As long as the productivity of workers in their thirties cannot be confidently predicted from observable traits when they are in their teens, the economy will continue to depend on educating large numbers of young people.

On the Edge: The Art of Risking Everything
by Nate Silver
Published 12 Aug 2024

Crypto gave rise to a lot of scams and cons, like Sam Bankman-Fried’s FTX—heavily invested in by Sequoia and other VC firms—which cost cryptocurrency holders out of at least $10 billion. And with AI, the disruption could be profound, resulting in mass reshuffling of the economy even if it remains relatively well aligned with human values. The second issue is that the huge payoffs contribute to a winner-take-all-economy. The VC/founder community is a small community. Top VC firms have from a small handful to a couple dozen partners each, in contrast to Wall Street firms, which have hundreds. Silicon Valley was once not a particularly show-offy place—many early founders were from the Midwest, and Wolfe thought its values reflected Calvinist, mid-country modesty—and even now, its mansions mostly take the form of low-lying structures hidden behind shrubbery, not opulent beachside or hillside homes as down south in L.A.

Trading and Exchanges: Market Microstructure for Practitioners
by Larry Harris
Published 2 Jan 2003

The more buyers and sellers who participate in the system, the more valuable it is to everyone who uses it. Network externalities can create tremendous barriers to entry. Usually, one trading system grows large, and no other system can become large enough, quickly enough, to be a viable economic competitor. Markets with network externalities are winner-take-all markets. Without government regulation, new entrants often cannot get a toehold. The U.S. government requires that all phone companies allow all other phone companies to access their networks. Without such linkages, new phone companies could not compete with existing companies. The cellular telephone, telephone-over-cable, and telephone-over-Internet industries would not exist today were it not for these open access regulations.

…

See volume-weighted average price Wall Street Journal, 587 warrant, 44 Warsaw Stock Exchange, 50 wash trade, 259 weak-form efficient market, 240 welfare economics, 203–5, 216 well-informed speculators, 5, 6 well-informed traders. See informed traders WFE. See World Federation of Exchanges wheat, 183–85, 215, 255, 335, 352 wholesalers, 282 wide spread, 280 width, 398, 399 Winans, Foster, 587 winner’s curse, 338, 340, 341–43 winner-take-all markets, 536 winning, 475, 476 wirehouses, 34, 329 wolf detectors, 328 wolves, 328 wolves in sheep’s clothing, 327 working orders, 71 World Federation of Exchanges (WFE), 48, 66 wrap accounts, 151 writers, 42, 75 Wunsch, R. Steven, 121 Yahoo.com, 99 yen-euro, 357 yield curve spread, 358 zero-coupon bonds, 40, 206 zero downtick, 81 zero net supply, 41, 44, 225, 354 zero-sum game, 6, 8, 176, 205, 206, 458, 479, 488 zero tick, 81 Zip drive, 568

The Facebook Effect
by David Kirkpatrick
Published 19 Nov 2010

Zuckerberg realized a long time ago that most users are not going to take the time to create multiple profiles for themselves on multiple social networks. He also knew from his endless bull sessions at Harvard and in Palo Alto about “network effects” that once consolidation begins on a communications platform it can accelerate and become a winner-take-all market. People will join and use the communications tool that the largest number of other people already use. He therefore made it a goal to create a tool not for the United States but for the world. The objective was to overwhelm all other social networks wherever they are—to win their users and become the de facto standard.

The Content Trap: A Strategist's Guide to Digital Change
by Bharat Anand
Published 17 Oct 2016

It bundled its services effectively—its chat service could be used within a game, and a gamer could import her avatars. And it transferred the strength of its network effect in one product to others—with the click of a button, a user could import her social graph from QQ into a Tencent game in order to play with her friends. Tencent was doing something many companies that compete in winner-take-all markets struggle with: It successfully created connections across different products—IM, games, microblogs—where each relied on connecting users. In effect, it shifted its strength from just one network to a portfolio of connected networks. To monetize these advantages, Tencent turned again to price discrimination.

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis
by Martin Wolf
Published 24 Nov 2015

Indeed, it appears from work at the World Bank that the clear losers from the economic developments of the last three decades have been the lower and middle classes of the high-income countries, whose incomes fall between the 75th and 95th percentiles from the bottom of the global income distribution.59 The forces driving the rise in inequality are complex. Technology helped create ‘winner-takes-all markets’ in which the most successful and productive participants could reap the lion’s share of the gains. This became notably true in the high-tech sector and in finance, which emerged as the most dynamic industries in high-income economies. Technology also increased the relative demand for skilled workers and lowered the demand for less-skilled ones.

Model Thinker: What You Need to Know to Make Data Work for You
by Scott E. Page
Published 27 Nov 2018

For the upper end of the income distribution, the empirical evidence most strongly supports the models that rely on technological change.16 For over twenty years, the IRS has tracked the highest 400 incomes. Those at the top of the distribution come from technology, mass retail, and finance, three industries that can scale quickly. That high growth rate could stem from winner-take-all markets for search engines (Google) or social networking sites (Facebook). These models tell us little about the lower end of the income distribution. Nor do they say much about income mobility, or explain why CEO pay in the United States far exceeds that in other countries. To explain these other features of the data, we need the other models, such as the income mobility model, Durlauf’s persistent inequality model, and the spatial voting model.

The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley
by Jimmy Soni
Published 22 Feb 2022

He thought back on the “excruciating” process of raising money, during which he and the Confinity team had been turned down over one hundred times. If the market soured, raising capital would become even more excruciating. Given a teetering market and a take-no-prisoners competitor, Thiel and others in the company began considering an alternative course. “A lot of us came to the conclusion that this would be a winner-take-all market, and that this should be a single company,” Confinity cofounder Ken Howery said. “Or both of us would spend ourselves into oblivion.” The company’s X.com tactics shifted subtly. Vince Sollitto, Confinity’s communications director, had mastered his craft in the cut and thrust of politics.

Rentier Capitalism: Who Owns the Economy, and Who Pays for It?
by Brett Christophers
Published 17 Nov 2020

As I have argued, rentierism is anti-competitive by nature: rentiers are by definition those who generate income from scarce assets under conditions of limited or no competition. In other words, reduced competition is integral to, not contingent on, the rentier’s mode of being. As Martin Kenney and John Zysman put it in one of the best existing discussions of the rise of the digital ‘platform economy’, ‘many platforms by their very nature prove to be winner-take-all markets, in which only one or two companies survive’.43 In other words, monopolization is a feature, not a bug. Those, such as Europe Economics’ Lilico and Sinclair, who dispute this point, arguing that competition is in fact relatively healthy in the digital platform space, invariably point to one particular example to prove their point: the fate of MySpace, which was the largest social-media platform in the world in the latter half of the 2000s.

The Age of Surveillance Capitalism
by Shoshana Zuboff
Published 15 Jan 2019

Economic historians describe the dedication to lawlessness among the Gilded Age “robber barons” for whom Herbert Spencer’s social Darwinism played the same role that Hayek, Jensen, and even Ayn Rand play for today’s digital barons. In the same way that surveillance capitalists excuse their corporations’ unprecedented concentrations of information and wealth as the unavoidable result of “network effects” and “winner-take-all” markets, the Gilded Age industrialists cited Spencer’s specious, pseudoscientific “survival of the fittest” as proof of a divine plan intended to put society’s wealth in the hands of its most aggressively competitive individuals.29 The Gilded Age millionaires, like today’s surveillance capitalists, stood on the frontier of a vast discontinuity in the means of production with nothing but blank territory in which to invent a new industrial capitalism free from constraints on the use of labor, the nature of working conditions, the extent of environmental destruction, the sourcing of raw materials, or even the quality of their own products.