Federal Reserve Bank of Minneapolis -- Senior Economist

Brief professional biography

While I’m interested in many economic issues, my great interest is monopoly. How do they behave? What costs do they inflict on society? I’ve been studying monopoly for more than 40 years. In fall 1978, I purchased “Industrial Concentration: The New Learning” for $6.95 in Minneapolis. I bought it in the basement of Blegen Hall (which housed a satellite bookstore at that point) at the University of Minnesota. I’ve had the book on my desk since (with its price sticker still attached, though heavily faded). I was in Minneapolis by chance. Driving cross-country with my friend Tom Whelan, we stopped in Minneapolis since he had a friend playing with the Vikings. Little did I know that, to my great fortune, a couple of years later I would be upstairs in Blegen Hall studying industrial organization and monopoly with Edward Prescott. And that a few more years hence I would be at the University of Wisconsin-Madison with Leonard Weiss, who played a prominent role in that book, as a colleague. Another important period was at the Federal Reserve Bank of Minneapolis during 1993-1994. A small group, consisting of Ed Prescott, Edward Green, Steve Parente, Tom Holmes, and myself, regularly met to discuss monopoly. Tom Holmes and I produced a draft of “Resistance to New Technology and Trade Between Areas” in 1993. For the last 25 years, this paper has formed a solid basis for much of the work I’ve finished, along with Tom and other colleagues, on monopoly.

Click here for my CV

NEW: The Profit Paradox: How Thriving Firms Threaten the Future of Work. By Jan Eeckhout.

Here is my book review published in "Book Reviews." Journal of Economic Literature, 60 (2): 639-48, 2022

NEW: A History of U.S. Factory-Built Housing: 100 Years Of Sabotage By Monopolies

Here are the slides from the talk I gave at the Federal Reserve Bank of Minneapolis on May 22nd, 2023

Telegram from Thurman Arnold to Henry Simons, see end of page

Recent Research on Monopoly:

***Working Paper***

“Monopolies Inflict Great Harm on Low- and Middle-Income Americans,” Federal Reserve Bank of Minneapolis, Staff Report 601 (May 2020).

Short essays written by myself and colleagues related to "Great Harm":

"Monopolies: Silent Spreaders of Poverty and Economic Inequality," co-authored with David Fettig for Promarket.org, the publication of the Stigler Center at the University of Chicago Booth School of Business; Federal Reserve Bank of Minneapolis, Staff Report 772 (September 2020).

"Solving the Housing Crisis Will Require Fighting Monopolies in Construction," to discuss some of the policy lessons from "Great Harm" in a more accessible form; Federal Reserve Bank of Minneapolis, Staff Report 773 (December 2020).

"Achieving Affordable Housing Will Require Fighting Monopolies in Construction," with David Fettig. This essay is related to the above, though significantly shorter.

"Because of Monopolies, Income Inequality Significantly Understates Economic Inequality," Federal Reserve Bank of Minneapolis, Staff Report 777 (March 2021).

What others have written about "Great Harm":

David Levine's summary:

"Monopoly: The modern field of industrial organization seems to have spent decades chasing itself into smaller and smaller circles while the real and serious problems of monopoly go ignored. James A. Schmitz, Jr. is trying to remedy this with his monumental indictment of modern monopoly: read his book Monopolies Inflict Great Harm on Low- and Middle-Income Americans."

John Cochrane's: Schmitz on Monopoly

Timothy Taylor's: Sabotaging the Competition: A Home Construction Example

"Schafer: Minneapolis Fed Economist Explains How Modern Monopolies Hurt Workers," Star Tribune (April 2021)

“New and Larger Costs of Monopoly and Tariffs,” Federal Reserve Bank of Minneapolis, Staff Report 468 (July 2012).
The Costs of Monopoly: A New View, Federal Reserve Bank of Minneapolis Region (July 2016).
“How the U.S. Dental Monopoly Created the U.S. Oral-Health Crisis,” with Shi Qi.

(paper coming soon)

Here are some slides from a talk Schmitz gave at the Federal Reserve Bank of Chicago on Sept. 14, 2018.

“How HUD and NAHB Created the U.S. Housing Crisis,” with Arilton Teixeira and Mark Wright.

(paper coming soon)

Here are some slides from a talk Schmitz gave at the University of Minnesota, honoring Ed Prescott and creating a fellowship in his honor on Sept. 21, 2018.

“Notes on the Disturbing State of U.S. Antitrust Institutions.”

(paper coming in a few weeks)

Other Research on Monopoly:

“Monopoly and the Incentive to Innovate When Adoption Involves Switchover Disruptions,” (Lead article) with Thomas Holmes and David Levine, American Economic Journal — Microeconomics (August 2012).
“Competition and Productivity: A Review of Evidence,” (with Thomas Holmes), Annual Review in Economics (2010)
“What Determines Labor Productivity?: Lessons from the Dramatic Recovery of the United States and Canadian Iron-Ore Industries Following Their Ear 1980s Crisis,” Journal of Political Economy (June 2005).
“Competitive Pressure and Labor Productivity: World Iron-Ore Markets in the 1980’s,” (with Jose E. Galdon Sanchez), American Economic Review (Sept. 2002).
“Competition at Work: Railroads vs. Monopoly in U.S. Shipping,”(with Thomas Holmes), Federal Reserve Bank of Minneapolis Quarterly Review (2001).
“Resistance to New Technology and Trade Between Areas,” (with Thomas Holmes) Federal Reserve Bank of Minneapolis Quarterly Review 19.2 (Winter 1995).

Some Important Readings by Giants in the Study of Monopoly:

Simons, Henry Calvert. A Positive Program for Laissez Faire: Some Proposals for a Liberal Economic Policy. (1934).
Arnold, Thurman. Labor Against Itself. (1943)

Important Telegrams:

Telegram from Thurman Arnold to Henry Simons before Simons trip to Washington DC to work with Arnold in the Antitrust Division of the DOJ (Source: Thurman Arnold papers at the American Heritage Center, University of Wyoming: Box 23, Folder 3.)

The views expressed in articles and other content on this website are those of the Author and do not necessarily reflect the position of the Federal Reserve Bank of Minneapolis (“Bank”) or the Federal Reserve System.