Sweeping changes have disrupted society courtesy of the Information Revolution, presenting great ... more Sweeping changes have disrupted society courtesy of the Information Revolution, presenting great opportunities in radically transformed economic markets but also great challenges in adapting to new and different forms of organization. Antitrust laws and other elements of competition policy are being re-examined. Specifically, the House Judiciary Committee conducted hearings in 2020 in which it asked key questions about the pattern of development in U.S. markets and options for policy reform. This paper, answering such queries, finds strong evidence for the view that, relative to practical alternatives that include E.U.-style regulation, digital markets in the U.S. appear robust, generating considerable innovation that produces pro-consumer outcomes. The global Internet is dominated by U.S.-developed technologies and business models discovered and deployed in a process of competitive rivalry. Even given imperfect rules and regulations, U.S. markets have contributed strongly to econom...
Page 1. WAS THE FAIRNESS DOCTRINE A ''CHILLING EFFECT''? EVIDENCE FROM THE PO... more Page 1. WAS THE FAIRNESS DOCTRINE A ''CHILLING EFFECT''? EVIDENCE FROM THE POSTDEREGULATION RADIO MARKET THOMAS W. HAZLETT AND DAVID W. SOSA* ABSTRACT The stated rationale for the Fairness ...
The traditional approach to monopoly posits a dead‐weight loss, a classic inefficiency, wherever ... more The traditional approach to monopoly posits a dead‐weight loss, a classic inefficiency, wherever market power is discovered. Critics such as Joseph Schumpeter argue that such dead‐weight losses are inconsequential in a dynamic setting, where long‐run trade‐offs are said to dominate them with postive sum gains, which are also claimed to flow from market power. Yet further examination reveals that even the static monopoly argument showing Pareto inefficiency is not due to a positive analysis but is an outcome determined by the normative interpretation of the monopolist's property rights. The costs which a firm possessing market power has in expanding its output are not considered as legitimate for inclusion in our analysis. (In other markets, traders are sometimes allowed to collect such rents without being labeled as inefficient—for instance, in the labor market.) The interesting questions become: Why have economists adopted this particular normative view of property rights? Is p...
According to Robert Bork's influential analysis, the Sherman Act was expressly instituted by ... more According to Robert Bork's influential analysis, the Sherman Act was expressly instituted by the 51st Congress to advance consumer welfare, but has often been misinterpreted by federal courts handing down anticonsumer decisions. This paper suggests that the political coalition backing the 1890 antitrust statute sought multiple social ends and did not faithfully seek to impose economic efficiency. The key evidence includes historical economic trends, congressional debate, the legislative agenda of Senator John Sherman, and the political conflict generated by the most contentious (and most electorally important) issue of the 51st Congress: the highly protectionist McKinley Tariff Act.
South African apartheid is a social system arising from the economic conflict of competitive inte... more South African apartheid is a social system arising from the economic conflict of competitive interest groups. During the past four centuries, this struggle has not been linear: Changing economic and demographic conditions have tended to make white and non‐white subclasses net complementary factors at certain times and net substitute factors at others. Moreover, such cross‐elasticities in production are not clearly delineated along racial lines. For example, the synergy of white capital and black labor formed the essential social “evil” which apartheid, promoted by white labor and farm interests, was created to expunge. Hence, isolating apartheid via international sanctions is inherently problematic. The imposition of apartheid itself was accompanied by extensive South African‐imposed trade barriers.
Formal regulatory parity can entail counterintuitive effects. In a series of state statutes, muni... more Formal regulatory parity can entail counterintuitive effects. In a series of state statutes, municipal governments have been directed to issue cable TV franchises to new competitors only after (a) formal hearings considering the ‘public interest’ in competition; and (b) imposing terms and conditions which are at least as burdensome as those contained in the incumbent's franchise. While billed as ‘level playing field’ laws, economic theory, an important case study in Connecticut, and a probit analysis of Ameritech's cable franchise acquisition strategy suggest that these statutes actually tilt the field against entrants.
The recent zero-priced award of $11–70 billion in digital TV (DTV) licenses by the federal govern... more The recent zero-priced award of $11–70 billion in digital TV (DTV) licenses by the federal government occurred when auctions had been initiated for non-broadcast licenses and when the seven decade-old regime of ‘public trusteeship’ in broadcasting had become famous for licensee reneging on promised obligations. Policymakers nonetheless declined to auction DTV licenses when enacting the Telecommunications Act of 1996, rejecting a plea from the Senate Majority Leader. This paper provides an overview of the episode and investigates three basic questions. (1) Why does Congress continue a regulatory system that routinely fails to provide the benefits it is supposed to generate? (2) Why did the National Association of Broadcasters propose high definition television as a way of keeping land mobile operators off an unused spectrum? (3) Why did Congress delegate to the FCC the decision to award licenses for digital television broadcasting?
Filed February 7, 2001 as a Comment in the Federal Communications Commission&... more Filed February 7, 2001 as a Comment in the Federal Communications Commission's "Secondary Markets" rule making, 37 prominent economists in regulation and telecommunications policy urge dramatic liberalization of spectrum policy. The statement calls for eliminating ...
The US residential broadband market is commonly characterized as a duopoly consisting of telephon... more The US residential broadband market is commonly characterized as a duopoly consisting of telephone carriers (digital subscriber lines) and cable TV operators (cable modems). The implication is drawn that market power obtains; this, in turn, drives recommendations for new competition policy remedies. Yet, market power cannot be directly deduced from market shares or price-cost margins. We develop an economic analysis
Sweeping changes have disrupted society courtesy of the Information Revolution, presenting great ... more Sweeping changes have disrupted society courtesy of the Information Revolution, presenting great opportunities in radically transformed economic markets but also great challenges in adapting to new and different forms of organization. Antitrust laws and other elements of competition policy are being re-examined. Specifically, the House Judiciary Committee conducted hearings in 2020 in which it asked key questions about the pattern of development in U.S. markets and options for policy reform. This paper, answering such queries, finds strong evidence for the view that, relative to practical alternatives that include E.U.-style regulation, digital markets in the U.S. appear robust, generating considerable innovation that produces pro-consumer outcomes. The global Internet is dominated by U.S.-developed technologies and business models discovered and deployed in a process of competitive rivalry. Even given imperfect rules and regulations, U.S. markets have contributed strongly to econom...
Page 1. WAS THE FAIRNESS DOCTRINE A ''CHILLING EFFECT''? EVIDENCE FROM THE PO... more Page 1. WAS THE FAIRNESS DOCTRINE A ''CHILLING EFFECT''? EVIDENCE FROM THE POSTDEREGULATION RADIO MARKET THOMAS W. HAZLETT AND DAVID W. SOSA* ABSTRACT The stated rationale for the Fairness ...
The traditional approach to monopoly posits a dead‐weight loss, a classic inefficiency, wherever ... more The traditional approach to monopoly posits a dead‐weight loss, a classic inefficiency, wherever market power is discovered. Critics such as Joseph Schumpeter argue that such dead‐weight losses are inconsequential in a dynamic setting, where long‐run trade‐offs are said to dominate them with postive sum gains, which are also claimed to flow from market power. Yet further examination reveals that even the static monopoly argument showing Pareto inefficiency is not due to a positive analysis but is an outcome determined by the normative interpretation of the monopolist's property rights. The costs which a firm possessing market power has in expanding its output are not considered as legitimate for inclusion in our analysis. (In other markets, traders are sometimes allowed to collect such rents without being labeled as inefficient—for instance, in the labor market.) The interesting questions become: Why have economists adopted this particular normative view of property rights? Is p...
According to Robert Bork's influential analysis, the Sherman Act was expressly instituted by ... more According to Robert Bork's influential analysis, the Sherman Act was expressly instituted by the 51st Congress to advance consumer welfare, but has often been misinterpreted by federal courts handing down anticonsumer decisions. This paper suggests that the political coalition backing the 1890 antitrust statute sought multiple social ends and did not faithfully seek to impose economic efficiency. The key evidence includes historical economic trends, congressional debate, the legislative agenda of Senator John Sherman, and the political conflict generated by the most contentious (and most electorally important) issue of the 51st Congress: the highly protectionist McKinley Tariff Act.
South African apartheid is a social system arising from the economic conflict of competitive inte... more South African apartheid is a social system arising from the economic conflict of competitive interest groups. During the past four centuries, this struggle has not been linear: Changing economic and demographic conditions have tended to make white and non‐white subclasses net complementary factors at certain times and net substitute factors at others. Moreover, such cross‐elasticities in production are not clearly delineated along racial lines. For example, the synergy of white capital and black labor formed the essential social “evil” which apartheid, promoted by white labor and farm interests, was created to expunge. Hence, isolating apartheid via international sanctions is inherently problematic. The imposition of apartheid itself was accompanied by extensive South African‐imposed trade barriers.
Formal regulatory parity can entail counterintuitive effects. In a series of state statutes, muni... more Formal regulatory parity can entail counterintuitive effects. In a series of state statutes, municipal governments have been directed to issue cable TV franchises to new competitors only after (a) formal hearings considering the ‘public interest’ in competition; and (b) imposing terms and conditions which are at least as burdensome as those contained in the incumbent's franchise. While billed as ‘level playing field’ laws, economic theory, an important case study in Connecticut, and a probit analysis of Ameritech's cable franchise acquisition strategy suggest that these statutes actually tilt the field against entrants.
The recent zero-priced award of $11–70 billion in digital TV (DTV) licenses by the federal govern... more The recent zero-priced award of $11–70 billion in digital TV (DTV) licenses by the federal government occurred when auctions had been initiated for non-broadcast licenses and when the seven decade-old regime of ‘public trusteeship’ in broadcasting had become famous for licensee reneging on promised obligations. Policymakers nonetheless declined to auction DTV licenses when enacting the Telecommunications Act of 1996, rejecting a plea from the Senate Majority Leader. This paper provides an overview of the episode and investigates three basic questions. (1) Why does Congress continue a regulatory system that routinely fails to provide the benefits it is supposed to generate? (2) Why did the National Association of Broadcasters propose high definition television as a way of keeping land mobile operators off an unused spectrum? (3) Why did Congress delegate to the FCC the decision to award licenses for digital television broadcasting?
Filed February 7, 2001 as a Comment in the Federal Communications Commission&... more Filed February 7, 2001 as a Comment in the Federal Communications Commission's "Secondary Markets" rule making, 37 prominent economists in regulation and telecommunications policy urge dramatic liberalization of spectrum policy. The statement calls for eliminating ...
The US residential broadband market is commonly characterized as a duopoly consisting of telephon... more The US residential broadband market is commonly characterized as a duopoly consisting of telephone carriers (digital subscriber lines) and cable TV operators (cable modems). The implication is drawn that market power obtains; this, in turn, drives recommendations for new competition policy remedies. Yet, market power cannot be directly deduced from market shares or price-cost margins. We develop an economic analysis
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