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Rising Markups and Declining Business Dynamism: Evidence From the Industry Cross Section

Popular Media In recent decades, various measures of “business dynamism”—such as new business entry rates and gross job or worker flows—have seen significant declines in the U.S. . . .

In recent decades, various measures of “business dynamism”—such as new business entry rates and gross job or worker flows—have seen significant declines in the U.S. (figure 1, right panel). Over a similar time frame, there is evidence that an important measure of market power—the average markup—has risen significantly (figure 1, left panel; De Loecker, Eeckhout, and Unger 2020). A natural question is whether these patterns are related.

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Antitrust & Consumer Protection

Has Law Become Stagnant?

Popular Media My last post provided an overview of my draft article The Cost of Justice at the Dawn of AI and explained the basic logic of Baumol’s cost disease for . . .

My last post provided an overview of my draft article The Cost of Justice at the Dawn of AI and explained the basic logic of Baumol’s cost disease for the practice of law. Just as in any other market, if the productivity of lawyers increases at a slower rate than the rest of the economy, legal services will become more expensive. And if a technology like artificial intelligence leads legal productivity to increase at a faster rate than the rest of the economy, then legal services will become cheaper.

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Innovation & the New Economy

Legal Productivity, the Cost Disease, and AI

Popular Media It has been a while since my last post on the Volokh Conspiracy. In 2021, I became associate dean at George Washington and did not . . .

It has been a while since my last post on the Volokh Conspiracy. In 2021, I became associate dean at George Washington and did not have time to write. Last year, I switched associate dean roles and my portfolio became smaller, so I was fortunate to have some time to return to scholarship and to complete several articles. I’ll begin my return to blogging by writing a series of posts offering shorter versions of the key arguments in a recently completed article that I have now submitted to law reviews, entitled The Cost of Justice at the Dawn of AI.

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Innovation & the New Economy

Entrepreneurial Experimentation Under Knightian Uncertainty: A Process Model

Scholarship Abstract Enrolling financiers is critical to new venture success. Building on the challenges of communicating novel and complex projects under Knightian uncertainty, we describe two . . .

Abstract

Enrolling financiers is critical to new venture success. Building on the challenges of communicating novel and complex projects under Knightian uncertainty, we describe two approaches—the opportunity discovery path vis-à-vis the effectuation/bricolage path—entrepreneurs and financiers can use to resolve alternative sources of uncertainty sequentially rather than simultaneously.

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Financial Regulation & Corporate Governance

Modeling Fee Shifting with Computational Game Theory

Scholarship Abstract While modern mathematical models of settlement bargaining in litigation generally seek to identify perfect Bayesian Nash equilibria, previous computational models have lacked game theoretic . . .

Abstract

While modern mathematical models of settlement bargaining in litigation generally seek to identify perfect Bayesian Nash equilibria, previous computational models have lacked game theoretic foundations. This article illustrates how computational game theory can complement analytical models. It identifies equilibria by applying linear programming techniques to a discretized version of a cutting-edge model of settlement bargaining. This approach makes it straightforward to alter some assumptions in the model, including that the evidence about which the parties receive signals is irrelevant to the merits and that the party with a stronger case on the merits also has better information. The computational model can also toggle easily to explore cases involving liability rather than damages and can incorporate risk aversion. A drawback of the computational model is that bargaining games may have many equilibria, complicating assessments of whether changes in equilibria associated with parameter variations are causal.

Read at SSRN.

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Innovation & the New Economy

Brian Albrecht on Market Power

Presentations & Interviews ICLE Chief Economist Brian Albrecht was a guest on the Lead-Lag Live podcast to discuss the issues of market concentration, inflation, and the role of . . .

ICLE Chief Economist Brian Albrecht was a guest on the Lead-Lag Live podcast to discuss the issues of market concentration, inflation, and the role of “superstar” firms in the economy. Audio of the full episode is embedded below.

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Antitrust & Consumer Protection

Are Early-Termination Fees ‘Junk’ Fees?

TOTM Cable and satellite companies often get a bad rap for early termination fees (ETFs). Consumer advocates portray them as “junk fees” or billing traps meant . . .

Cable and satellite companies often get a bad rap for early termination fees (ETFs). Consumer advocates portray them as “junk fees” or billing traps meant to cheat customers. And the Federal Communications Commission (FCC) appears to accept these allegations at face value, characterizing ETFs as “junk fee billing practices … that penalize subscribers for terminating video service or switching video service providers.”

Read the full piece here.

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Telecommunications & Regulated Utilities

The Curious Case of the Missing Data Caps Investigation

TOTM In an announcement that was treated to mild fanfare (meaning it was reported by certain tech blogs, but largely ignored elsewhere), Federal Communications Commission (FCC) . . .

In an announcement that was treated to mild fanfare (meaning it was reported by certain tech blogs, but largely ignored elsewhere), Federal Communications Commission (FCC) Chair Jessica Rosenworcel asked her fellow commissioners in June 2023 to support a formal notice of inquiry (NOI) to learn more about how broadband providers use data caps on consumer plans. The FCC simultaneously opened a “data portal” soliciting “narrative information” about consumers’ experiences with data caps.

But more than half a year later, the NOI has not been issued and none of the information from the data portal has been publicly released.

Read the full piece here.

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Telecommunications & Regulated Utilities

Lynne Kiesling on the Economics of Energy

Presentations & Interviews ICLE Academic Affiliate Lynne Kiesling was a guest on the The Answer Is Transaction Costs podcast to discuss distributed energy resources (DERs) and the complex . . .

ICLE Academic Affiliate Lynne Kiesling was a guest on the The Answer Is Transaction Costs podcast to discuss distributed energy resources (DERs) and the complex regulatory frameworks that shape smart-grid technologies. The full episode is embedded below.

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Innovation & the New Economy