It’s been 35 years since Californians voted by a narrow majority to pass Proposition 103, completely overhauling how the nation’s largest state regulates the business of insurance.

That’s an awfully long time. So long, it seems, that even the man who wrote Prop 103 appears to have forgotten what it actually says.

Read the full piece here.

What should a competition law for 21st century look like? This point is debated across many jurisdictions. The Digital Markets, Competition, and Consumers Bill (DMCC) would change UK competition law’s approach to large platforms. The bill’s core point is to place the UK Competition and Markets Authority’s (CMA) Digital Markets Unit (DMU) on a statutory footing with relaxed evidentiary standards to regulate so-called “Big Tech” firms more easily. This piece considers some areas to watch as debate regarding the bill unfold.

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Abstract

Ronald Coase famously exposed the limitations of economic analyses that rely upon assumptions of frictionless markets. He highlighted the importance of including transaction costs in economic analyses and issued a challenge to economists to think seriously about how transaction costs impact economic systems. Harold Demsetz, extended Coase’s analysis to show how these costs alter the way firms price and market their products. Demsetz’ analysis underscored that the costs of providing a market sometimes exceed the benefits of creating one in the first place and examined conditions where transaction costs imply that zero amounts of explicit market pricing will be efficient.

This article focuses upon extending Demsetz’s insights concerning non-linear pricing contracts that seem not to “price” key side effects of the economic exchange. In particular, we analyze the welfare and output effects of two examples of such contracts commonly used by firms that are frequently subject to antitrust scrutiny: metered pricing and loyalty discounts. The analysis demonstrates how a firm’s choice to set prices for its products are influenced by transaction and information costs and examines whether changes in output caused by the use of these non-linear pricing schemes are positively correlated with changes in total and consumer welfare. The article then discusses conditions under which measuring output effects can reliably differentiate between welfare-increasing and welfare-reducing uses of non-linear pricing.

ICLE Director of Competition Policy Dirk Auer testified before the UK House of Lords’ Communications and Digital Committee in a May 23, 2023 hearing reviewing the Digital Markets, Consumer and Competition Bill. Videos of his answers to the Lords’ questions are embedded below.

ICLE Academic Affiliate Todd Zywicki joined Southwest Public Policy Institute President Patrick M. Brenner on SPPI’s SPPI-TV podcast to discuss interest rate caps and the role of the Consumer Financial Protection Bureau (CFPB). Video of the full episode is embedded below.

After the oral arguments in Twitter v. Taamneh, Geoffrey Manne, Kristian Stout, and I spilled a lot of ink thinking through the law & economics of intermediary liability and how to draw lines when it comes to social-media companies’ responsibility to prevent online harms stemming from illegal conduct on their platforms. With the Supreme Court’s recent decision in Twitter v. Taamneh, it is worth revisiting that post to see what we got right, as well as what the opinion could mean for future First Amendment cases—particularly those concerning Texas and Florida’s common-carriage laws and other challenges to the bounds of Section 230 more generally.

Read the full piece here.

One of the biggest names in economics, Daron Acemoglu, recently joined the mess that is Twitter. He wasted no time in throwing out big ideas for discussion and immediately getting tons of, let us say, spirited replies.

One of Acemoglu’s threads involved a discussion of F.A. Hayek’s famous essay “The Use of Knowledge in Society,” wherein Hayek questions central planners’ ability to acquire and utilize such knowledge. Echoing many other commentators, Acemoglu asks: can supercomputers and artificial intelligence get around Hayek’s concerns?

Read the full piece here.

Abstract

Implicit bias concepts are increasingly influential in the law. Washington and California have adopted jury selection rules that use implicit bias ideas to reduce the showing needed to reject a peremptory challenge. Under Washington’s rule, a prima facie showing of bias may be made by showing that an objective observer, who is deemed to know that implicit (unconscious) bias has resulted in the unfair exclusion of jurors, could view race or ethnicity as a factor in the challenge. Once such a showing is made, the challenge is denied.

In two important cases, the Washington Supreme Court has applied implicit bias concepts from the peremptory challenge context to post-verdict challenges that argued that a verdict was tainted by bias. Under the rule in these cases, if a prima facie showing of bias is made the burden shifts to the prevailing party to prove that the verdict was not tainted by bias. The premises Washington has constructed from implicit bias reasoning are so strong that the burden of proof will likely be decisive in such cases. There is no non-arbitrary way to use such premises to distinguish cases in which conduct is problematic from those in which it is not.

The first case, State v. Berhe, led to an extraordinary hearing in which jurors were sworn and examined about their conduct during deliberations. This article uses the transcript of that hearing to assess whether implicit bias concepts will prove useful in such post-verdict challenges. It argues that at least IAT-style association data will not prove useful in assessing post-verdict challenges because such challenges pose a problem of attribution, not association. The question is whether to attribute a juror’s conduct to their disposition or to other factors, such as the trial record. Implicit bias reasoning may skew such analysis by encouraging judges to favor dispositional explanations over contextual explanations.

ICLE President Geoff Manne joined the American Bar Association’s Our Curious Amalgam podcast to debate Spencer Waller of the Loyola University Chicago School of Law over the core purpose of antitrust and whether it should be solely concerned with economic efficiency, or also used as a tool to uphold and promote democratic values. The full conversation is embedded below.