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Very Serious – ICLE Editor-in-Chief R.J. Lehmann was quoted in Josh Barro’s Very Serious newsletter in an item about development on barrier islands such as New York’s Fire Island. You can read full newsletter (behind a subscriber firewall) here.

It’s funny that Gavin is the one who brings this up because RJ, who wrote in with a cultural question, happens to be an expert on public policy related to property insurance. I called up RJ to ask what he thinks about me owning a house on a barrier island.

“In the long term, is it a good idea to live on a barrier island?” he asked back to me, rhetorically. “Probably not.”

Barrier islands are always subject to erosion, storms and flooding; climate change and sea-level rise raise the possibility that many of them will be uninhabitable or submerged in 100 years, RJ noted. And my entirely serious retort to him was that I plan to be dead in 100 years.

 

PORTLAND, Ore. (June 2, 2022)—Claims that the digital-advertising market is monopolized by one or two large players have been at the core both of legislation recently introduced in the U.S. Senate and an antitrust lawsuit filed by Texas and 17 other states. A new issue brief from the International Center for Law & Economics (ICLE), however, argues that critics take an exceedingly narrow view of the relevant market and fail to consider how advertisers and publishers can choose among competing forms of advertising, either online or offline.

Written by ICLE President Geoffrey Manne and Senior Scholars Eric Fruits and Lazar Radic, the brief notes that advertising technology, or “adtech,” bears none of the markers of a sector subject to monopoly, such as decreasing output and rising costs. Indeed, U.S. digital advertising grew by an average annual increase of 19% last decade, from $26 billion in 2010 to $152 billion in 2020, even as the Producer Price Index for Internet advertising sales declined by an annual average of 5% over the same period.

But digital advertising is just one kind of advertising, and advertising more generally is just one piece of a much larger group of marketing activities, the ICLE scholars note. They argue that the weight of evidence suggests that offline and online advertising represent a far more unified and integrated economically relevant market than is commonly assumed.

“What publishers sell to advertisers is access to consumers’ attention,” the ICLE scholars write. “While there is no dearth of advertising space, consumer attention is a finite and limited resource. If the same or similar consumers are variously to be found in each channel, all else being equal, there is every reason to expect advertisers to substitute between them, as well.”

The problem, the scholars note, is that the use of erroneously narrow market definitions to bring antitrust litigation, or as the basis of legislation that would impose new rules on market participants, is likely to raise the cost of business for advertisers, publishers, and intermediaries alike.

The full issue brief is here. Journalists interested in interviewing ICLE scholars about the law & economics of digital advertising should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

PORTLAND, Ore. (May 19, 2022) — Legislation introduced today in the U.S. Senate to address alleged “conflicts of interest” in the digital-advertising market would instead threaten to halt decades of technological innovation that have benefited both advertisers and publishers, scholars with the International Center for Law & Economics (ICLE) warn.

Dubbed the Competition and Transparency in Digital Advertising Act, the bill would impose a host of new duties on firms with more than $5 billion in digital-advertising revenue and mandate that firms with more than $20 billion in digital-advertising revenue may not participate in the market as any combination of a buy-side broker, sell-side broker, seller of digital-advertising space, and/or owner of a digital-advertising exchange.

The following statement may be attributed to ICLE President and Founder Geoffrey Manne:

“This legislation fundamentally misunderstands the role that intermediaries have played in creating a market that matches advertisers and websites automatically and that serves users the most relevant ads. This revolution in targeted advertising has allowed websites to monetize their products without having to charge user fees, allowing people to access entertaining and informative content for free. Platforms like digital-ad exchanges have incentive to balance costs and benefits to participants on all sides of the transaction. To the extent that they fail to do that efficiently or effectively, digital advertising is a market with low barriers to entry and new competitors emerge all the time. This legislation threatens to take us back to the old days of massive inefficiency in the advertising industry, and of consumers being inundated with marketing pitches for goods and services they would never want.”

We also recommend reading this recent Wall Street Journal op-ed by ICLE Academic Affiliate Todd Henderson and this blog post on Truth on the Market by Senior Scholar Eric Fruits. Journalists interested in interviewing ICLE scholars about the legislation or the law & economics of digital advertising should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

IPWatchdog – ICLE Academic Affiliates Adam Mossoff and Jonathan Barnett were cited by IP Watchdog in a story about comments they submitted to the European Commission regarding standard-essential patents. You can read full story here.

On May 9, a comment signed by a coalition of 25 law professors, economists and former U.S. government officials, and co-written by Adam Mossoff, Law Professor at George Mason University’s Antonin Scalia Law School, and Jonathan Barnett, the Torrey H. Webb Professor of Law at the University of Southern California’s Gould School of Law, was submitted to the European Commission as a response to the EU governing body’s call for evidence on standard-essential patents. Like another recent response to the EU Commission by a group of scholars with the International Center for Law & Economics (ICLE), the Mossoff-Barnett comment attempts to dispel several misconceptions about the impact that SEPs have on the commercialization of new technologies, especially major communications technologies like 4G/LTE and WiFi that have been widely commercialized to the benefit of the vast majority of global consumers, thanks in large part to the patent rights that help to structure commercialization efforts.

Congress has been considering legislation in recent months that would mark the most significant change to antitrust law in a generation. At issue is whether the bills would increase competition in digital markets, and what attendant impacts may be anticipated.

A recent comment letter from the American Bar Association Antitrust Law Section, the world’s largest professional organization for antitrust and competition law and consumer protection, discussed one of those bills, the American Innovation and Choice Online Act (S. 2992), at length in an effort to assist with ongoing consideration of the measure.

Professor Sean Sullivan, a member of the ABA Antitrust Law Section, will join representatives from ICLE and UVA in his individual capacity to discuss AICOA, the Section’s comments, and what reform could mean for consumers, digital platforms, and the future of antitrust law.

Please join us May 19, 2022, at 2 p.m. ET for this discussion. You can register for the event here.

	Sean Sullivan Law professor at University of Iowa and ABA Antitrust Section
	Elyse Dorsey Visiting Scholar at the University of Virginia and an Adjunct Professor at Antonin Scalia Law School at George Mason University
	Geoff Manne Moderator & speaker President & Founder, ICLE

On Sept. 15 and 16, 2022, the International Center for Law & Economics (ICLE) will host a research roundtable at our headquarters in Portland, Oregon, to bring together authors and commentators to discuss research relating to market structure and regulation.

We are soliciting proposals from potential authors for this event. Proposals should briefly describe the thesis, argument, or hypothesis the author is exploring; its importance as a research topic and relevance to contemporary policy discussions; the intended methodological approach; the current state of the work (both early- and mid-stage research is suitable for this event); and any challenges that the author anticipates needing to overcome to complete this work.

Authors of proposals selected for inclusion will receive $12,000 honoraria to facilitate this work. This honorarium will be awarded in stages: upon participation in the roundtable, including submission of a draft paper written for an academic audience by Sept. 2, 2022; upon publication of a short-form version of the work written for a non-academic audience; and upon acceptance of the paper for publication in an established academic journal.

We also welcome expressions of interest from potential commentators who would like to participate in this event.

Topics of Interest

We seek papers relating broadly to the following. We are primarily interested in policy-relevant research and are open to work from a range of disciplines, including those that may not currently be much engaged in policy debates on these topics (e.g., business, political science, history, engineering, sociology, anthropology) and using a range of approaches and methodologies, including both empirical and nonempirical work.

• Conglomerate business models: This topic includes work that studies potential benefits and harms for consumers arising from conglomerate business models and other large platform-based industries. Potential benefits and harms include economic issues (e.g., changes in prices or quality of service), but also may include topics such as impacts on trust in and governance of public institutions.
• Market-structuring regulation: There is a long history of using regulation to structure markets, including scholarly debate about the effectiveness of such regulation. Proposals relating to this topic should evaluate how or whether such regulation can be used in the contemporary setting, in particular relating to the structure or operation of platform-based industries. We note a special interest in empirical work that considers the structure of network markets and their regulation, the role of switching costs, the measurement of network effects, and similar topics.
• Vertical integration: This topic is relatively straightforward. There has been extensive discussion of vertical integration in recent years, including proposals for regulation (especially in the context of, e.g., self-preferencing, interoperability, and the like). Proposals relating to this topic may address issues relating to vertical integration generally but may also be responsive to contemporary policy proposals (including, e.g., how to effectively implement them or the risks and tradeoffs they may create).
• Other topics: While we have special interest in the topics listed above, it is not an exclusive or exhaustive list. We welcome proposals relating broadly to themes suggested by this call for proposals. In addition, recognizing that some research (especially empirical research) might require additional funding (e.g., to obtain access to data or research assistance), we are happy to include requests for additional funding as is necessary to support work selected for inclusion in this roundtable.

Submission Details

Research proposals should be submitted to both Gus Hurwitz ([email protected]) and Keith Fierro Benson ([email protected]). Any proposal submitted by Monday, June 13, will be given consideration. Proposals received after June 13 will be considered on a rolling basis.

IPWatchdog – ICLE President and Founder Geoffrey Manne, Director of Competition Policy Dirk Auer; Director of Innovation Policy Kristian Stout, and Associate Director of Legal Research Ben Sperry, ICLE were cited by IP Watchdog in a story about comments the institute submitted to the European Commission regarding standard-essential patents. You can read full story here.

Four scholars with the International Center for Law & Economics (ICLE) have sent comments to the European Commission urging against any changes to the EU’s legal framework for licensing of standard-essential patents (SEPs) that would limit SEP holders’ ability to seek injunctions against alleged infringers. The ICLE scholars write: “It is simply not helpful for a regulatory body to impose a particular vision of licensing negotiations if the goal is more innovation and greater ultimate returns to consumers.”

BRUSSELS (May 11, 2022) — European policymakers should proceed with caution as they look to update the legal framework that underpins licensing of standard-essential patents (SEPs), scholars with the International Center for Law & Economics (ICLE) argue in comments filed with the European Commission.

Responding to concerns about patent holdup and royalty stacking affecting SEPs, the commission is considering changes that would constrain SEP holders’ ability to seek injunctions against alleged infringers. But the empirical evidence suggests that the current system works and that the ills associated with the alleged overenforcement of intellectual-property rights do not materialize in industries that rely on SEPs, according to the filing from ICLE President Geoffrey Manne, Director of Competition Policy Dirk Auer, Director of Innovation Policy Kristian Stout, and Associate Director of Legal Research Ben Sperry.

“It is simply not helpful for a regulatory body to impose a particular vision of licensing negotiations if the goal is more innovation and greater ultimate returns to consumers,” the ICLE scholars write. “Instead, where possible, policy should prefer allowing parties to negotiate at arm’s length and to resolve disputes through courts. In addition to maintaining the sometimes-necessary remedy of injunctive relief against bad-faith implementers, this approach allows courts to explore when injunctive relief is appropriate on a case-by-case basis.”

ICLE cautions that weakening protections for SEP holders would encourage firms to integrate vertically, rather than to specialize; reduce startup companies’ access to capital markets by making it harder to collateralize intellectual property; and erode American and European firms’ technological leadership.

Journalists interested in interviewing ICLE scholars about standard-essential patents should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

PORTLAND, Ore. (May 4, 2022) — As the Senate Judiciary Committee convenes a hearing this morning on the subject of swipe fees and competition in the credit- and debit-card markets, scholars with the International Center for Law & Economics (ICLE) caution lawmakers that capping interchange fees has done far more harm than good, transferred wealth from consumers to the shareholders of large merchants, and impeded competition, and that such caps should not be expanded.

Congress imposed price caps on interchange fees for debit cards issued by banks with more than $10 billion in assets in 2010, under an amendment to the Dodd-Frank Act introduced by current Judiciary Committee Chairman Richard Durbin (D-Ill.). While Durbin’s stated goal was to save consumers money at the checkout counter, a recent ICLE literature review details that, in practice, the caps have had the opposite effect. To offset lost revenue from interchange fees, banks increased account fees and other charges, passing through 42% of their losses. Meanwhile, merchants passed through, at most, 28% of the savings they realized from lower debit-card interchange fees.

“Poorer consumers were hit the hardest, because banks reduced the availability of free checking accounts and raised the minimum deposit amounts to qualify for free checking,” ICLE Senior Scholar Julian Morris said. “Many poorer customers appear to have left the banking system as a result.”

The Durbin amendment also introduced requirements prohibiting exclusivity arrangements among debit-card issuers and payment networks, on the premise that this would lead to competition in the routing of debit-card payments. But according to Morris, this has primarily affected community banks and credit unions, who have been forced to accept the lower interchange fees charged by some PIN debit networks. Credit unions alone have lost more than $6 billion in interchange-fee revenue, Morris notes, with many forced to increase other fees and/or reduce lending.

“Ironically, the Durbin Amendment also seems to have delayed entry by financial technology or ‘fintech’ companies. Since these companies are at the cutting edge of innovation, offering new products and reducing costs, it would appear that the Durbin amendment has actually hindered competition,” Morris said.

For more details on the economics of payment-card networks, see the ICLE white papers “The Effects of Price Controls on Payment-Card Interchange Fees: A Review and Update” and “Credit Cards and the Reverse Robin Hood Fallacy: Do Credit Card Rewards Really Steal from the Poor and Give to the Rich?” Journalists interested in interviewing Julian Morris or other ICLE scholars about the economics of payment-card networks should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.