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TOTM As we approach a presidential election year, it is time to begin developing a comprehensive reform agenda for the Federal Trade Commission (FTC). In that . . .
As we approach a presidential election year, it is time to begin developing a comprehensive reform agenda for the Federal Trade Commission (FTC). In that spirit, this post proposes 12 reforms that could be implemented by new leadership, either through unilateral action by a new chair or (in some cases) majority votes of the commission.
Read the full piece here.
Scholarship Abstract This article examines C. S. Lewis’s Abolition of Man from the perspective of economics. One of the principles of economics first taught by Adam Smith was . . .
This article examines C. S. Lewis’s Abolition of Man from the perspective of economics. One of the principles of economics first taught by Adam Smith was that of specialization and division of labor. The overlap between the discipline of economics and the teaching of Lewis can be described as an application of this principle. Economics is a scholarly discipline that studies how choices are made. The division of labor that Lewis offers is the recognition that freedom of choice is not an end in itself.
Scholarship Abstract What are the welfare implications of markup heterogeneity across firms? In standard monopolistic competition models, such heterogeneity implies inefficiency even in the presence of . . .
What are the welfare implications of markup heterogeneity across firms? In standard monopolistic competition models, such heterogeneity implies inefficiency even in the presence of free entry. We enrich the standard model with heterogeneous firms so that preferences are non-separable in off-market time and market consumption and show that this changes the welfare implications of markup heterogeneity. In this context, homogeneity of markups is neither necessary nor sufficient for efficiency. The marginal cost of the marginal firm is weakly inefficiently high when off-market time and market consumption are complements and inefficiently low when they are substitutes, and the equilibrium allocation devotes weakly too few resources to firm creation. However, when off-market time and market consumption are perfect complements, markups are heterogeneous across firms and yet the equilibrium allocation is efficient.
Abstract In this article, we examine one mechanism through which enforcement innovation occurs and is passed into practice at the U.S. antitrust agencies. Our main . . .
In this article, we examine one mechanism through which enforcement innovation occurs and is passed into practice at the U.S. antitrust agencies. Our main thesis is that agency economists are uniquely situated to produce, adapt, and disseminate new methodologies that improve enforcement accuracy because of the multiple and conflicting roles they play. Agency economists are trained in academic PhD programs to value methodology above application, and to read and publish in academic journals. They know how to narrow questions, so that they can be answered precisely, using theoretical and/or empirical models. But when they arrive at the agencies, these economists trained in academic PhD programs are thrust into decision-making roles where they must render judgments on messy, real-world cases, typically with imperfect knowledge, and often in conflict with agency attorneys, political appointees, and/or the economists and attorneys who appear on behalf of parties. How to manage this process in a way that produces growth (useful innovation) is a primary institutional challenge for the antitrust agencies.
We focus on the organizational structure of the U.S. antitrust agencies with an eye toward isolating the factors that encourage or discourage the development and application of useful, innovative economic tools. Specifically, we examine how the relationship between academia and the agencies and the dual responsibilities of research and casework serve to encourage what has become known as “enforcement R&D,” the development and application of new methodologies for screening and evaluating mergers, and for quantifying the expected harm to competition of various behaviors.
See at SSRN.
Scholarship Abstract Many studies have employed regression analysis with data drawn from court opinions. For example, an analyst might use regression analysis to determine the factors . . .
Many studies have employed regression analysis with data drawn from court opinions. For example, an analyst might use regression analysis to determine the factors that explain the size of damages awards or the factors that determine the probability that the plaintiff will prevail at trial or on appeal. However, the full potential of multiple regression analysis in legal research has not been realized, largely because of the sample selection problem. We propose a method for controlling for sample selection bias using data from court opinions.
Read at SSRN.
TOTM Tyler Cowen has a new online book out titled “GOAT: Who is the Greatest Economist of All Time, and Why Does it Matter?” While there . . .
Tyler Cowen has a new online book out titled “GOAT: Who is the Greatest Economist of All Time, and Why Does it Matter?” While there are potential problems in treating ideas like basketball, the project is a fun, fast read overall. As the author of a newsletter with frequent gifs, I’m all for encouraging light-hearted discussions of economics and economists (in addition to the super serious work that needs to be done).
What does it mean to be the GOAT, according to Tyler?
To qualify as “GOAT the greatest economist of all time,” I expect the following from a candidate. The economist must be original, of great historical import, serve as a creator and carrier of important ideas, have a hand in both theory and empirics, have a hand in both macro and micro, and be “not too wrong” on the substance of issues. Furthermore, the person also must be a pretty good economist! That is, if you sat down with the person and discussed economic issues, you would be in some way impressed.
I won’t spoil Tyler’s answer, but we see from the table of contents that the main contenders are Milton Friedman, F.A. Hayek, J.M. Keynes, John Stuart Mill, Thomas Malthus, and Adam Smith.
Readers of our Economic Forces (heck, readers of the title of this post) newsletter will notice that Armen Alchian, our newsletter’s avatar, is not on the list. Alchian isn’t even on Tyler’s list of “names who deserve greater consideration,” a list that includes Homer. Yes, the poet. I know Homer reads The Economist, but c’mon! No mention of Alchian is a travesty! (It wouldn’t be a GOAT discussion without some hyperbole.)
So here is my case for why Armen Alchian is the GOAT.
Presentations & Interviews ICLE Chief Economist Brian Albrecht joined the Human Action Podcast to discuss the work of Nobel Prize winner Claudia Goldin, with an emphasis on the . . .
ICLE Chief Economist Brian Albrecht joined the Human Action Podcast to discuss the work of Nobel Prize winner Claudia Goldin, with an emphasis on the male-female wage gap. Video of the full episode is embedded below.
TOTM Under the leadership of its professional anti-Amazoner Chair Lina Khan, the Federal Trade Commission (FTC) has finally filed its antitrust complaint against Amazon. No, not . . .
Under the leadership of its professional anti-Amazoner Chair Lina Khan, the Federal Trade Commission (FTC) has finally filed its antitrust complaint against Amazon. No, not the complaint about how it’s unfair to take six clicks to cancel your Prime membership. This is the big one. It mostly revolves around sellers needing to use Amazon’s fulfillment services to be part of Amazon Prime and lowering reach rankings if products are priced lower on other sites.
Instead of covering the arguments in the complaint, I want to use the complaint as an example of how I use the basics of supply and demand to sort through one of the arguments made by the FTC. Nothing about the use of price theory implies certain policy conclusions about the case. I’m just trying to be transparent, as I’ve done in the past, about how I use economics to reason about these important questions. Besides self-indulgence, the hope is that the examples help readers do the same.
TOTM In this post—the last planned post for this symposium on The FTC’s New Normal (though we will continue to accept unsolicited submissions of responses)—I will offer some . . .
In this post—the last planned post for this symposium on The FTC’s New Normal (though we will continue to accept unsolicited submissions of responses)—I will offer some summary of the ideas that have been shared here over the past month, before turning to some of my own thoughts. To keep your attention rapt, I will preview that my thoughts will live up to the title of this post: I will sing some sincere praise for the Federal Trade Commission (FTC) and U.S. Justice Department’s (DOJ) honesty and newfound litigiousness.
