Corrupt cartels and monopolies dominate the global economy with impunity, in part by exploiting asymmetric information to lie, cheat, steal, and deceive. Asymmetric information is the disparity in knowledge that exists among buyers and sellers in a market. For example, a used car salesman might know that a given car on the lot could be a lemon, but the buyer has no clue. A financial advisor may recommend investments to to the client that inflate commission fees, but the client may think that the advice is being given on good faith. The asymmetry of information between buyers and sellers can affect everything from prices to product quality, and since it exposes some of the inherent weaknesses and imperfections in a market economy, it has often been used as a justification for government regulations to various degrees.
But the libertarian economists Tyler Cowen and Alex Tabarrok argued in a 2015 essay that asymmetric information is becoming less relevant because of technological innovation (“The End of Asymmetric Information”). They brought up several examples to support their argument, such as the declining frequency of odometer fraud in used car sales or reputation mechanisms on Yelp and Angie’s List that allow consumers to rate sellers and businesses. Their central point was that increased technological innovation and the democratizion of knowledge from the Internet have collectively reduced the importance of asymmetric information, and therefore we don’t need additional government laws and regulations to achieve the same goal. Buyers and sellers are now apparently capable of policing each other, so we should just get the government out of the way. That’s their thesis.
They are flatly wrong. Technological innovation has massively exacerbated asymmetric information, because it’s allowed the rich and powerful to protect and amplify their advantages over rivals and competitors by deploying new methods of evasion and subterfuge. Many new technologies are not even shared or publicized. They’re concentrated in the hands of powerful elites, who exploit them to ensure their ongoing class domination of society. There are thousands of critical patents that are kept secret by the United States government because they involve sensitive technology for national security. For another example, Volkswagen fooled government regulators by controlling its diesel engines with highly sophisticated software that could quietly cheat during emissions tests.
And for a final example, large brokerage firms on Wall Street operate advanced and secure dark pool market exhanges that can facilitate block trades through high-frequency algorithms for major institutional investors, all away from public view. For these elite investors, ensuring organized secrecy and informational asymmetry is exactly the point, as they don’t want to alert other investors and the public at large about the prices involved in their deals, prices that in some cases can differ sharply from those in public exchanges like the NYSE or NASDAQ. High-frequency trading also makes it far easier to commit spoofing, the practice of placing vast numbers of fake orders that are canceled before execution, all as a way of generating artificial demand for a particular stock or asset. In 2020, JP Morgan Chase paid a fine of almost $1 billion to the federal government for carrying out widespread order spoofing in precious metals futures contracts. Although JP Morgan happened to get caught in this one case, the vast majority of spoofing incidents are never publicized or prosecuted, precisely because high-frequency trading allows sophisticated investors to game the system and get away with it.
Furthermore, most of the examples given by Cowen and Tabarrok are focused on informational disparities at the point of market exchange. But so many of the major informational asymmetries in modern capitalism are actually found upstream in the production process. For example, a massive global auto parts cartel in the 2000s had substantial downstream effects on car prices, but consumers knew absolutely nothing about it. The cartel fixed and rigged bidding prices for over 200 different types of car parts sold to manufacturing companies like Toyota and Honda. A paper in 2019 cited estimates that the cartel’s activities affected international commerce worth anywhere from $3.2 trillion to $5 trillion, with injuries and overcharges sitting somewhere between $600 billion and $1 trillion. As of 2019, over $20 billion in penalties had been imposed on over 300 companies grouped into roughly 70 cartels worldwide. Likewise, the Lysine Cartel in the 1990s impacted prices for consumer food products around the world. Lysine is a critical amino acid that goes into animal feed. In the early 1990s, the American corporate giant ADM entered into a cartel agreement with other major food companies in East Asia and elsewhere. Under the agreement, the cartel tightly controlled global lysine prices and shipping volumes, effectively carving up the world market among the various cartel participants.
Simply put, even if Cowen and Tabarrok are correct that informational asymmetries are declining at the point of market exchange, that would prove nothing about asymmetries at different points along the economic chain, especially for industrial production, logistics, and distribution. The evidence clearly shows that these asymmetries still exist and have many complex downstream effects on prices for consumer goods and services. Asymmetric information is still here and still routinely plagues markets around the world. What we need now is a fight against monopoly power, not distractions from wayward libertarians who don’t know how the world works.
GEA & Monkeys’ thanks to the @Substack writer of say 5 April 2026 so let me do an awesome resource-profligate Artificial-intelligence Tell-search on the dude..
I’ll be ‘back’ in 5
Erald Kolasi
Author of The Physics of Capitalism. PhD in Physics. Complex systems theorist exploring the nexus of economics, politics, energy networks, and ecological dynamics. Find out more about my work at www.eraldkolasi.com.
Jonno
Australia
Billionaire-🙈🙊🙉🐒s with Olivettis 