In August, the Trump Administration announced a deal with Intel to take a 9.9-percent financial stake of the firm, the latest intervention that inserts the federal government squarely in the middle of firm-level decision-making. In a new insight, Director of Competition Policy Fred Ashton explains how the executive branch could be laying the groundwork for a new economic model that supplants market competition with a state-managed system, likely leading to an inefficient allocation of resources and providing an uneven benefit to a small group of firms.

An excerpt:

Government policymaking, rather than applying across-the-board rules for industry, would likely cater to the needs of individual firms and put competitors at a disadvantage. Additionally, firms now must consider actions that could conflict with the political position of the federal government for fear of retribution. This government-created incentive would likely lead to a misallocation of resources that results in higher prices, fewer choices, and inferior quality goods for consumers.

Read the analysis.