This is my third and final installment summarizing the arguments in my draft article The Cost of Justice at the Dawn of AI. In the first, I reviewed Baumol’s cost disease’s implications for the legal sector. Baumol recognized that if the productivity of any sector improved less than the productivity of the economy as a whole, the goods or services from that sector would become more expensive. In the second, I assessed whether the legal sector has stagnated in this way. This turns out to be difficult or impossible to measure conclusively, because it’s hard to assess whether legal work is improving in quality. But crude measures like consumer price indices suggest stagnation. Rapidly decreasing trial rates provide further evidence. It should not be surprising that fewer cases, civil and criminal, make it to trial if legal process is getting more expensive.

In yet another example of interagency cheerleading from the Federal Trade Commission (FTC), Chair Lina Khan recently touted the work of the Consumer Financial Protection Bureau (CFPB) on payments networks:

New @CFPB research reveals that large banks are offering worse credit card terms & interest rates than small banks and credit unions, regardless of credit risk. For an average cardholder, the difference can amount to $400-$500 in additional interest/year.https://t.co/gsliqy1ohn

— Lina Khan (@linakhanFTC) February 20, 2024

Read the full piece here.

Just days before the EU’s Digital Markets Act (DMA) was set to enter into force, the European Commission hit Apple—one of the six designated “gatekeepers” to which the new law will apply—with a hefty €1.8 billion fine for the kinds of anti-steering provisions that will be banned by the DMA, which enters into force on 6 March. 

The timing of the fine, and its seemingly arbitrary amount, are both curious. Announced as being the result of a four-year investigation, the decision amounts to an exclusionary-abuse turned exploitative-conduct case, and is underpinned by a flimsy theory of harm in a market that has seen exponential growth over the past decade. The fact that the Commission fined Apple for conduct that would be banned per se just two days later raises questions as to why the DMA was necessary and whether the Commission has faith in the new law’s effectiveness.

Read the full piece here.

When we are sick or in pain, we need relief. We know available prescription drugs won’t always be perfect. They sometimes have side effects. But we are grateful for even imperfect relief as an alternative to perfect pain.

Pharmaceutical companies aim to identify good drugs and get them to market, while constantly returning to the lab to innovate and make them even better, working to get the next version closer to perfect and with fewer side effects. But, thanks to a recent decision by a California appellate court, the incentives to develop new drugs and innovate to find even better alternatives may be over. California may have permanently impeded all pharmaceutical innovation by holding that a drug company can be sued for bringing two safe drugs to market, but not discovering the better one first. If a new court decision holds, these companies can be punished unless they bring no drug until they find the perfect drug.

Read the full piece here.

Once upon a time (July 9, 2021, to be precise), President Joe Biden issued an executive order on “Promoting Competition in the American Economy,” which declared that “a whole-of-government approach is necessary to address overconcentration, monopolization, and unfair competition in the American economy.”

Read the full piece here.

2024 will be a make-or-break year for the $42 billion taxpayer-funded Broadband Equity, Access, and Deployment program administered by the National Telecommunications and Information Administration.

Making BEAD a success and achieving the Biden Administration’s vision of “Internet for All” requires an ambitious “all-of-the-above approach” from federal, state, and local policymakers to take much-needed action on utility pole reforms – an often-neglected issue that is critical to ensuring unserved, rural communities are connected to reliable, high-speed internet.

Read the full piece here.

Abstract

Antitrust law and policy rely on a hypothetical average consumer. But no one is average. With this basic observation in mind, we show how agent-based modeling (“ABM”) allows enforcers and policymakers to bypass imaginary averages by observing interactions between unique agents. We argue that agent-based regulatory and enforcement policies have a greater potential than average-based public policies because they are more realistic. As we show, the realism brought by ABM enables antitrust agencies and policymakers to better anticipate the effects of their actions and, perhaps more importantly, to time their interventions better.

Read at SSRN.

Abstract

As it relates to Bitcoin, there are several interesting questions to address:

(1) Why does money exist and what role does it play in society? How does bitcoin fit within our understanding of the role of money in society?
(2) What is bitcoin worth?
(3) Is bitcoin (or can bitcoin be) a sound form of money?
(4) Should states or governments be involved? Should they buy bitcoin?

In this paper, I attempt to provide some answers to these questions by drawing on insights from mainstream economic theory.

The press is abuzz with news about the Federal Trade Commission’s (FTC) Feb. 26 announcement that it would challenge the proposed Kroger/Albertsons mega-supermarket merger, which had been in the works since the fall of 2022. If the FTC succeeds in obtaining a temporary restraining order and preliminary injunction in Oregon federal district court (a big if), it plans to review the transaction in an administrative hearing beginning in late July.

Read the full piece here.