Algorithms may make collusion easier, by reducing the cost of monitoring and reacting to the behavior of other participants in an oligopoly. But even the fastest of algorithms can’t guarantee collusion, contrary to what Stucke and Ezrahi seem (p. 62-65) to suggest. After all, the classic model of the failure of collusion, the prisoner’s dilemma, […]
I have on the one side anarchy, competition, and freedom, all synonyms, and on the other command, monopoly, and regulation. In general, the left wants freedom in private life (e.g., the liberation of women from their husbands) and regulation in public life (e.g., tax those sugary soft drinks). But when it comes to industrial organization, […]
Once, we standardized the price, and let the airlines compete on the product. That was nice, but elitist, because the standardized price was high. Now, we standardize nothing, except safety. Because the consumer notices only price, the airlines compete on headline fares, to fool the consumer, and debase the product to maximize profit. The solution […]
Bigness is billions of human beings working together to make each others’ lives better, in perfect harmony and love. What’s wrong with that? I’m with Galbraith, not Brandeis.
When optimization arrives, either others will optimize against you or you will optimize against others. Business against you or you against business. There will be either corporate planning or central planning.
The pervasive problem of absence of information on sellers admits only of a government fix. Only government can extract seller information and present it to consumers in a way that maximizes consumer welfare. Buyers can try to unite, but sellers will never volunteer information. Only an agent wielding the scissors of the law can lay […]
Paul Krugman had an interesting post a couple of years ago about the claims of the rich to contribute a unique, valuable something to the economy. (He calls it jobcreation.) He pointed out that if we assume that the rich get paid every penny of their contribution to output, then the rich confer no net […]
Does anyone think Apple’s $147 billion cash horde is a reward that was required to induce Steve Jobs to create the iPhone? It’s obviously not necessary to cover other costs. Monopoly profit is by definition profit that’s not necessary to induce production. When a firm generates a large cash horde, it’s because it doesn’t know […]
I have been following the debate in the pages of Antitrust between two groups of distinguished economists about “pay for delay”, which is when a branded drug maker pays a generic drug maker to delay entry into the market. The question is how much pay for delay do you need before you can conclude […]