The Economist takes on “sin taxes” in a recent article, “‘Sin’ taxes—eg, on tobacco—are less efficient than they look.” The article has several lessons for policy makers eyeing taxes on e-cigarettes and other vapor products. Historically, taxes had the key purpose of raising revenues. The “best” taxes would be on goods with few substitutes (i.e., inelastic demand) and on goods deemed to be luxuries.
With its $5 billion fine against Google, the European Commission (EC) just applied to the search giant an old U.S. political trick: gerrymandering; the idea that if antitrust watchdogs draw markets narrowly enough, every company can be made to look like an evil monopolist.
Senator Mark Warner has proposed 20 policy prescriptions for bringing “big tech” to heel. The proposals — which run the gamut from policing foreign advertising on social networks to regulating feared competitive harms — provide much interesting material for Congress to consider.
What to make of the decision by the European Commission alleging that Google has engaged in anticompetitive behavior? In this post, Julian Morris contrasts the European Commission’s (EC) approach to competition policy with US antitrust, briefly explores the history of smartphones and discusses the ruling.
The European Commission’s decision in Google Android cuts a fine line between punishing a company for its success and punishing a company for falling afoul of the rules of the game. Which side of the line it actually falls on cannot be fully understood until the Commission publishes its full decision.
Today’s Google Android decision could severely harm competition and innovation in the digital economy. It ignores the powerful rivalry that exists between Android devices and Apple’s iPhone. To compete against Apple, Google opted for an open-source project which entails a complex governance structure. By meddling with these rules, the Commission’s decision threatens the viability of the Android platform. Consumers will be the biggest losers.
It is sometimes said that the most important question in all of economics is “compared to what?” UCLA economist Harold Demsetz — one of the most important regulatory economists of the past century — coined the term “nirvana fallacy” to critique would-be regulators’ tendency to compare messy, real-world economic circumstances to idealized alternatives, and to justify policies on the basis of the discrepancy between them. Wishful thinking, in other words.