Archive for July, 2008
Posted by Josh Wright on July 18, 2008
David Glenn brings us the latest in the filesharing dispute. HT: Peter Klein, who says sensible things about the newest, and ugliest piece of the controversy:
Strumpf suggests that Liebowitz is pressing the issue so zealously because Liebowitz’s center at UT-Dallas receives funding from the RIAA and “other commercial interests,” a charge I find shockingly inappropriate and unprofessional. (Anyone who knows Liebowitz can attest to his zeal on a number of unpopular issues, such as his defense of QWERTY and his attack on the Boston Fed study of mortgage discrimination.)
I don’t know the primary sources well but one gets the definite impression that Oberholzer-Gee and Strumpf are being less-than-fully candid about their work. Their defenses against various critics (not only Liebowitz) seem weak and unconvincing. Overall, this episode reminds me of the Card-Kreuger controversy over the minimum wage: an empirical paper finds the opposite of what everyone expects and makes a big splash, but the authors don’t have a solid explanation for their findings, there are questions about the data and methods, and specialists aren’t convinced by the results. My conjecture is that in this case, like the minimum-wage episode, the spashy result will not stand the test of time.
I share Peter’s view that the Strumpf allegations about Liebowitz are remarkably unprofessional. This is especially true given the consensus view that many of Liebowitz’s critiques have gone unanswered (Glenn writes: “in several cases, the authors have not replied to Mr. Liebowitz’s criticisms, either in public or in Mr. Strumpf’s referee report”). The leading alternative theory to Strumpf’s concerning Liebowitz’s interest in the topic, is as Craig Newmark puts it, “maybe he’s just upset that a 40+-page lead article in one of the profression’s top journals has serious errors.” Indeed. Glenn’s article is worth reading. It contains a nice summary of the “summer sales” test and I also learned that the OS paper “grandfathered” out of the new Journal of Political Economy policies on replication.
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Posted in economics, music, scholarship, technology | Comments Off
Posted by Josh Wright on July 14, 2008
The following email from Henry Manne takes up our previous discussion of the future of law and economics (available here in downloadable form) and is published with permission. I’ve inserted a few links where Manne references a few blog posts responding to our earlier discussion. With that said, here is Manne:
It is a little disappointing that there has not been a larger debate stirred up by our efforts, but that may tell us something about the level of interest either in L&E or in what happens in law schools today. Frankly I think I would put my money on the latter explanation. I think the entire legal education enterprise has become so politicized and ideological (and you know in which direction that leans) that there really are comparatively few law professors, especially among the younger ones, who even identify with the problem we were discussing. They don’t even know that law schools not too many years ago were intellectual wastelands. They still are, but the field is ersatz social science instead of doctrinal law.
That is what more and more leads me to regret losing the old approach of lawyers teaching doctrine to would-be lawyers. At least they did a creditable job of that. And incidentally I think Solum is too parochial when he asserts that there is no social justification for that approach to law. I think Hayek’s defense of common law is just that and very powerful.
There may be room for Solum’s PhD idea, but I do not think it will be occur
in the law schools (Harvard and Michigan and Stanford would never forego the training of practicing lawyers). His third possibility, the mixed interdisciplinary law school is the model that I think we have already seen won’t work, if for no other reason than the low quality of the non-law discipline scholarship. (His model of universities as a market for truth instead of a more traditional market just won’t fly unless he can adduce some far different evidence than I have seen.) The other blog, discussing engineers and physicists does nothing more than repeat the problem in an
analogy which is far from perfect. Engineers, unlike lawyers, do not have much choice of careers after graduation, and woe be unto the bridge builder whose ends don’t meet – unlike the would-be philosopher kings among self-described L&E scholars, who don’t know one end from another.)
Having said all that I want to warn against predicting the future in anything as chaotic as our universities. I don’t think there is much that is systematic in any not-for-profit organizations, and the problems are just compounded in our universities. One really good charismatic academic entrepreneur could do more to set the tone of future law schools than anything we have discussed. But whether such a person will ever exist and what he or she will look like I have not a clue.
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Posted in law and economics, law school, legal scholarship, universities | 1 Comment »
Posted by Josh Wright on July 13, 2008
Program is here (HT: Spontaneous Order). Attendees and presenters include Coase, Cheung, Tullock, Demsetz, North, Peltzman, and many others. The conference is from July 14th-18th.
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Posted in announcements, economics | Comments Off
Posted by Josh Wright on July 12, 2008
Dan Drezner raises the plausible possibility that the real reason for the objection of some 8% (101) of the full-time faculty to the Milton Friedman Institute at the University of Chicago, which we blogged about earlier here, is “grounded less on ideology and more on an effort to ensure these departments get a bigger slice of the pie.” HT: Jon Adler. The letter itself concedes that funding is a motivating factor for some dissenters:
Many of us are also perturbed that other units of the University that routinely engage the issues that the Friedman Institute is designed to address were not included in the planning, nor included in the ongoing core scholarly endeavors of the Institute….
Still others believe that, given the influx of private contributions to the MFI, the University now has the opportunity to provide roughly equivalent resources for critical scholarly work that seeks out alternatives to recent economic, social, and political developments.
And for more support for Drezner’s theory, he points out that: “the modal department affiliations of the petitioners are Anthropology, East Asian Languages, English, History, and Political Science.”
In my prior post, I noted that “I’m particularly interested to know whether any members of the University of Chicago Law School signed this or alternatively, have publicly supported the Milton Friedman Institute.” Well, from the list of signatories, we can answer the first question. None from the law school. But what about the lack of public support? I’ve seen a few economists come out in defense of the Milton Friedman Institute, e.g. Steve Levitt, but nothing so far from Chicago’s law school faculty unless I’ve missed it.
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Posted in business, economics, law and economics, law school, musings, universities | 2 Comments »
Posted by Josh Wright on July 11, 2008
Antitrust Encyclopedia (HT: Antitrust Hotch Potch) and Antitrust World Reports. Both have been added to the blogroll.
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Posted by Josh Wright on July 10, 2008
Jonathan Baker (American University) has posted Market Concentration in the Antitrust Analysis of Horizontal Mergers to SSRN. Baker’s article is another of the entries which will be appearing in the forthcoming Antitrust Law and Economics volume edited by Keith Hylton (Elgar Publishing) (see this post for links to others). Here is the abstract:
This handbook chapter will appear in Antitrust Law & Economics (Keith Hylton, ed. forthcoming 2009). It describes the role of market concentration in the legal framework for the antitrust review of horizontal mergers and evaluates the extent to which modern economic analysis supports a role for concentration in that review. The chapter examines market definition, the predicate for measuring market shares and market concentration, and the role of market shares and concentration in the analysis of the coordinated and unilateral competitive effects of merger. The central issue considered is when and how market shares, and market concentration statistics derived from them, form an appropriate basis for presuming harm to competition from merger.
Check it out, as well as this thoughtful review of Baker’s article in the Antitrust Source from John Woodbury.
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Posted in antitrust, economics, law and economics, legal scholarship, mergers & acquisitions, scholarship, SSRN | 1 Comment »
Posted by Josh Wright on July 10, 2008
My colleague and co-author Bruce Kobayashi has posted The Law and Economics of Predatory Pricing to SSRN and is forthcoming in Keith Hylton’s Antitrust Law and Economics volume (Edward Elgar Publishing). It is a comprehensive and insightful review of the expansive legal and economic literatures on this topic. Here’s the abstract:
This chapter reviews the law and economics of predatory pricing. Areeda and Hovenkamp (2006, 323) noted that other areas of the law of monopolization are “in much the same position as the theory of predatory pricing was in the 1970s: no shortage of theories, but a frightening inability of courts to assess them.” In the past two decades, scholarship on the economics of predatory pricing has evolved from the relatively settled consensus in which predatory pricing was thought to be irrational, rarely tried, and even more rarely successful, to a point where much less is settled. Recent theoretical work emphasizing strategic theory has shown that predation can be rational, and empirical studies have presented evidence consistent with successful predation. In this sense, the economics of predatory pricing has moved closer to other areas of monopolization.
However, the legal response to predatory pricing, a relatively administrable and permissive rule based in part on the assumption that successful predation was rare, has remained relatively intact. While the recent economic literature may have eroded this basis for the adoption of permissive standards for predatory pricing, other reasons for adopting such a rule, based on the benefits of bright line rules that would be administrable by courts, still remain. Thus, even considering the recent advances in economic theory, it is unwise to minimize or ignore this underlying purpose of the Brooke Group rule.
Check out the whole thing. For interested readers, you can also download my chapter in the same volume (with Alden Abbott of the FTC) on Antitrust Analysis of Tying Arrangements and Exclusive Dealing or Professor Hylton’s entry on The Law and Economics of Monopolization Standards.
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Posted in antitrust, economics, law and economics, scholarship, SSRN | Comments Off
Posted by Josh Wright on July 9, 2008
HT: Brian Leiter.
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Posted in announcements, economics, law and economics, law school | Comments Off
Posted by Josh Wright on July 8, 2008
In the comments to this post, Peter Swire (Ohio State) points to some recent comments (see also here and here) he submitted to the Federal Trade Commission on how to incorporate privacy into conventional antitrust analysis. The privacy and antitrust link appears to be something that will receive quite a bit of attention in the coming months and years. The basic argument in favor of incorporating privacy into antitrust analysis under appropriate circumstances is not too controversial:
- Antitrust exists to protect against the exercise of market power that reduces consumer welfare
- Reductions in non-price competition can reduce consumer welfare
- Privacy can be a form of non-price competition in some markets
- Ergo, antitrust analysis ought to be concerned with privacy concerns
The first three bullet points are easy to understand. I agree with Swire’s comments that to the extent that privacy amenities (or services or rights) can be an important dimension of non-price competition, antitrust analysis must be flexible enough to incorporate those concerns. Indeed, each of the Commissioners evaluating the Google/Doubleclick merger agreed that privacy concerns are part of the consumer welfare analysis.
What seems to me to be missing in this discussion is a theory of how a particular merger will change the incentives of the firm to provide privacy amenities as a form of non-price competition. Modern merger analysis, especially in the unilateral effects context which seems most relevant here, focuses on the question of how the pricing incentives of the post-merger firm change after the merger. There is a substantial economics literature now which has increased our understanding of how mergers might impact pricing incentives. It is generally no longer sufficient in merger cases to point to an increase in concentration by itself as support for the assertion that consumer welfare will be harmed. An agency challenging a merger must present a compelling competitive effects story. Here, the competitive effects are going to be privacy-related. It seems to me that to move forward from “privacy should count in antitrust analysis because it is a form of non-price competition” to “this merger will reduce privacy and harm consumers” one must have a theory that explains: (1) why the specific merger changes the firms incentives to provide privacy amenities above and beyond a showing that the merger increases concentration, and (2) if the merger creates market power, why the firm will exercise that power in the form of reducing privacy rather than increasing the price.
Thoughts?
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Posted in antitrust, economics, mergers & acquisitions, privacy, regulation, technology | Comments Off
Posted by Josh Wright on July 8, 2008
Barak Richman (Duke) has posted The Antitrust of Reputation Mechanisms: Institutional Economics and Concerted Refusals to Deal to SSRN (forthcoming in the Virginia Law Review). Here’s the abstract:
An agreement among competitors to refuse to deal with another party is traditionally per se illegal under the antitrust laws. But coordinated refusals to deal are often necessary to punish wrongdoers, and thus to deter undesirable behavior, that state sponsored courts cannot reach. When viewed as a mechanism to govern transactions and induce socially desirable cooperative behavior, coordinated refusals to deal can sustain valuable reputation mechanisms. This paper employs institutional economics to understand the role of coordinated refusals to deal in merchant circles and to evaluate the economic desirability of permitting such coordinated actions among competitors. It concludes that if the objective of antitrust law is to promote economic welfare, then per se treatment – or any heightened presumption of illegality – of reputation mechanisms with coordinated punishments is misplaced.
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Posted in antitrust, contracts, economics, law and economics, legal scholarship, regulation, SSRN | Comments Off
