Attention Brokers Tim Wu
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Acquisitions of “Nascent” Competitors
the antitrust source Ⅵ www.antitrustsource.com Ⅵ August 2 0 20 1 Acquisitions of “Nascent” Competitors Jonathan Jacobson and Christopher Mufarrige Virtually every day we hear about how “big tech” has gotten “too big.” Congressional inquiries of Google, Amazon, Facebook, and Apple fill the business pages regularly. 1 The FTC is investigat - ing, 2 the Justice Department and State Attorneys General are reportedly about to file suit, 3 and enthusiastic academics and politicians are positing expanding antitrust as a way to “rein in” the activities of these firms. One of the most discussed approaches is using antitrust to prevent (or at least inhibit) large technology platforms from acquiring promising start-ups—based on the theo - ry that at least some such acquisitions of these “nascent competitors” eliminate important future Vcompetition. 4 Britain’s Competition and Markets Authority (CMA) and the U.S. Federal Trade Com - mission recently blocked the planned merger of Illumina and Pacific Biosciences on just that basis. 5 Other investigations are reportedly pending, 6 and there even have been some reports of revisiting long-consummated mergers, such as Facebook/Instagram or Google/YouTube. 7 We believe these efforts are largely misguided. “Nascent competitor” acquisitions tend to add useful new features to products consumers already love, eliminate little or no current competition, supply the acquired firm’s users with far greater support and innovation, and provide a valuable exit ramp for investors, encouraging future investments in innovation. Consumer harm is at best Ⅵ speculative. And most importantly, critics have identified no instances in which meaningful com - Jonathan Jacobson is a petition has been lost or consumers harmed. -
Price Competition with Satisficing Consumers
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Aberdeen University Research Archive Price Competition with Satisficing Consumers∗ Mauro Papiy Abstract The ‘satisficing’ heuristic by Simon (1955) has recently attracted attention both theoretically and experimentally. In this paper I study a price-competition model in which the consumer is satisficing and firms can influence his aspiration price via marketing. Unlike existing models, whether a price comparison is made depends on both pricing and marketing strategies. I fully characterize the unique symmetric equilibrium by investigating the implications of satisficing on various aspects of market competition. The proposed model can help explain well-documented economic phenomena, such as the positive correla- tion between marketing and prices observed in some markets. JEL codes: C79, D03, D43. Keywords: Aspiration Price, Bounded Rationality, Price Competition, Satisficing, Search. ∗This version: August 2017. I would like to thank the Editor of this journal, two anonymous referees, Ed Hopkins, Hans Hvide, Kohei Kawamura, Ran Spiegler, the semi- nar audience at universities of Aberdeen, East Anglia, and Trento, and the participants to the 2015 OLIGO workshop (Madrid) and the 2015 Econometric Society World Congress (Montreal) for their comments. Financial support from the Aberdeen Principal's Excel- lence Fund and the Scottish Institute for Research in Economics is gratefully acknowledged. Any error is my own responsibility. yBusiness School, University of Aberdeen - Edward Wright Building, Dunbar Street, AB24 3QY, Old Aberdeen, Scotland, UK. E-mail address: [email protected]. 1 1 Introduction According to Herbert Simon (1955), in most global models of rational choice, all alternatives are eval- uated before a choice is made. -
Industrial Organization 06 Market Structure and Market Power
Industrial Organization 06 Market structure and market power Marc Bourreau Telecom ParisTech Marc Bourreau (TPT) Lecture 06: Market structure and market power 1 / 39 Outline 1 Introduction: definition of market power 2 Definition of relevant market An example: market definition in the telecommunications sector Approach based on cross price-elasticities Other approaches 3 The relationship between concentration and market power An example with the Cournot oligopoly model Issues in measuring concentration and market power Other concentration measures Other market power measures 4 The SCP paradigm 5 Some elements about the control of concentration Marc Bourreau (TPT) Lecture 06: Market structure and market power 2 / 39 Introduction Introduction Remember, from the lecture on Monopoly: Definition of "market power" The ability of a firm to raise its price over marginal cost. Importance of measuring "market power": In competition policy, some practices (for instance, bundling) are illegal if a firm has market power. In order to estimate the market power of a firm, we need to define first the relevant market. Marc Bourreau (TPT) Lecture 06: Market structure and market power 3 / 39 Market definition Definition of the relevant market Two questions: Product market Which products should we include in the "market"? Geographical market Which geographical zone do we have to consider? An economic definition of the market A market can be defined as a group of products presenting strong demand- substitutability and supply-substitutability. Marc Bourreau (TPT) Lecture 06: Market structure and market power 4 / 39 Market definition Definition of the relevant market Definition of the European Commission (1997) The relevant market includes all the products and/or services considered as interchangeable or substitutable on the account of product characteristics, price, and regular use. -
Tolerated Use
Columbia Law School Scholarship Archive Faculty Scholarship Faculty Publications 2008 Tolerated Use Tim Wu Columbia Law School, [email protected] Follow this and additional works at: https://scholarship.law.columbia.edu/faculty_scholarship Part of the Intellectual Property Law Commons Recommended Citation Tim Wu, Tolerated Use, COLUMBIA JOURNAL OF LAW & THE ARTS, VOL. 31, P. 617, 2008; COLUMBIA LAW & ECONOMICS WORKING PAPER NO. 333 (2008). Available at: https://scholarship.law.columbia.edu/faculty_scholarship/1534 This Working Paper is brought to you for free and open access by the Faculty Publications at Scholarship Archive. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarship Archive. For more information, please contact [email protected]. The Center for Law and Economic Studies Columbia University School of Law 435 West 116th Street New York, NY 10027-7201 (212) 854-3739 Tolerated Use Tim Wu Working Paper No. 333 May, 2008 Do not quote or cite without author’s permission. This paper can be downloaded without charge at: The Social Science Research Network Electronic Paper Collection http://papers.ssrn.com/paper.taf?abstract_id=1132247 An index to the working papers in the Columbia Law School Working Paper Series is located at: http://www.law.columbia.edu/lawec/ Tolerated Use Tim Wu† Introduction “Tolerated use” is a term that refers to the contemporary spread of technically infringing, but nonetheless tolerated use of copyrighted works. Such patterns of mass infringement have occurred before in copyright history, though perhaps not on the same scale, and have usually been settled with the use of special laws, called compulsory licensing regimes, more familiar to non-copyright scholars as liability rules. -
Does the United States Have a Productivity Slowdown Or a Measurement Problem?
DAVID M. BYRNE Federal Reserve Board JOHN G. FERNALD Federal Reserve Bank of San Francisco MARSHALL B. REINSDORF International Monetary Fund Does the United States Have a Productivity Slowdown or a Measurement Problem? ABSTRACT After 2004, measured growth in labor productivity and total factor productivity slowed. We find little evidence that this slowdown arises from growing mismeasurement of the gains from innovation in information technology–related goods and services. First, the mismeasurement of infor- mation technology hardware is significant preceding the slowdown. Because the domestic production of these products has fallen, the quantitative effect on productivity was larger in the 1995–2004 period than since then, despite mismeasurement worsening for some types of information technology. Hence, our adjustments make the slowdown in labor productivity worse. The effect on total factor productivity is more muted. Second, many of the tremendous consumer benefits from the “new” economy such as smartphones, Google searches, and Facebook are, conceptually, nonmarket: Consumers are more productive in using their nonmarket time to produce services they value. These benefits raise consumer well-being but do not imply that market sector pro- duction functions are shifting out more rapidly than measured. Moreover, esti- mated gains in nonmarket production are too small to compensate for the loss in overall well-being from slower market sector productivity growth. In addi- tion to information technology, other measurement issues that we can quantify (such as increasing globalization and fracking) are also quantitatively small relative to the slowdown. 109 110 Brookings Papers on Economic Activity, Spring 2016 The things at which Google and its peers excel, from Internet search to mobile software, are changing how we work, play and communicate, yet have had little discernible macroeconomic impact. -
The United States Has a Market Concentration Problem Reviewing Concentration Estimates in Antitrust Markets, 2000-Present
THE UNITED STATES HAS A MARKET CONCENTRATION PROBLEM REVIEWING CONCENTRATION ESTIMATES IN ANTITRUST MARKETS, 2000-PRESENT ISSUE BRIEF BY ADIL ABDELA AND MARSHALL STEINBAUM1 | SEPTEMBER 2018 Since the 1970s, America’s antitrust policy regime has been weakening and market power has been on the rise. High market concentration—in which few firms compete in a given market—is one indicator of market power. From 1985 to 2017, the number of mergers completed annually rose from 2,308 to 15,361 (IMAA 2017). Recently, policymakers, academics, and journalists have questioned whether the ongoing merger wave, and lax antitrust enforcement more generally, is indeed contributing to rising concentration, and in turn, whether concentration really portends a market power crisis in the economy. In this issue brief, we review the estimates of market concentration that have been conducted in a number of industries since 2000 as part of merger retrospectives and other empirical investigations. The result of that survey is clear: market concentration in the U.S. economy is high, according to the thresholds adopted by the antitrust agencies themselves in the Horizontal Merger Guidelines. By way of background, recent studies of industry concentration conclude that it is both high and rising over time. For example, Grullon, Larkin, and Michaely conclude that concentration increased in 75% of industries from 1997 to 2012. In response to these and similar studies, the antitrust enforcement agencies recently declared that their findings are not relevant to the question of whether market concentration has increased because they study industrial sectors, not antitrust markets. Specifically, they wrote, “The U.S. -
Harvard Law Review 132, No. 2, December 2018, Pp
SURESH NAIDU November 12, 2019 BUSINESS ADDRESS: 1405 IAB MC 3328 [email protected] 420 W. 118th St. www.santafe.edu/~snaidu New York, NY. 10027 APPOINTMENTS: Professor, Department of Economics/SIPA, Columbia University. September-December 2016 Visiting Researcher Princeton University Industrial Relations Section. July 2010-July 2016 - Assistant Professor, Department of Economics/SIPA, Columbia University. August 2013-May 2014 – Visiting Assistant Professor, MIT Department of Economics. 2008-2010 - Harvard Academy Junior Scholar Postdoctoral Fellow, Harvard University. OTHER AFFILIATIONS: Santa Fe Institute External Faculty Roosevelt Institute Fellow NBER Faculty Research Fellow (DEV, POL, and, DAE) BREAD faculty affiliate Microsoft Research New York: Visiting Researcher (2016-2017), Consulting Researcher (2017-2018). Faculty Affiliate with Columbia University Population Research Center and Data Sciences Institute. Social Science Research Council Working Group on Big Data in the Historical Social Sciences. EDUCATION: DEGREE DATE FIELD University of California, Berkeley Ph.D. December 2008 Economics University of Massachusetts, Amherst M.A. August 2004 Economics University of Waterloo B.Math.(With Distinction) May 2001 Pure Mathematics (minor in Peace and Conflict Studies) PUBLISHED PAPERS: “Text-based Ideal Points” (with David Blei and Keyon Vafa) -Proceedings of the 58th Annual Meeting of the Association for Computational Linguistics 2020. “Do Americans Want to Tax Capital? Evidence from Online Surveys” (with Ray Fisman, Ilyana Kuziemko, and Keith Gladstone). -Forthcoming in Journal of Public Economics.. “Monopsony in Online Labor Markets” (with Arindrajit Dube, Jeff Jacobs, and Siddarth Suri) -American Economic Review- Insights, 2(1) March 2020. 33-46. “American Slavery and Labor Market Power” -Economic History of Developing Regions, 35(1), January 2020 3-22. -
The Attention Economy of Online Advertising∗
The Attention Economy of Online Advertising∗ Alexander Whitey Kamal Jainz July 23, 2019 Abstract Internet users often surf to multiple websites in order to accomplish a single task. When this happens, do these different sites face the right incentives when choosing their advertising policies? We build a model showing that websites face an interesting tradeoff: on the one hand, they are prone to over-advertise (similar to double marginalization); on the other hand, they tend to misallocate ads across sites (a distortion we call misplacement). Standard solutions to the double marginalization problem, such as adding competition among certain sites, make the misplacement problem more severe. This tradeoff is important for news aggregators and social networks, as it affects their decisions whether to link to external content providers or to expand the amount of content they offer by themselves. Understanding these incentives helps to inform the current debate regarding the concentration of influence among a small set of online platforms. Keywords: Platforms, Advertising, Misplacement, Market Power JEL Codes: D21, D40, L23, L42, L86 ∗We thank seminar audiences at the U.S. Federal Communications Commission, the University of Virginia, the University of Miami, Peking University and Hong Kong University as well as Simon Anderson, Gary Biglaiser, Marc Bourreau, Denis Charles, Jacques Cremer,´ Eric Horvitz, Bruno Jullien, Chris Meek, Martin Peitz, Paul Seabright, Sven Seuken, Wing Suen, Thomas Tregouet, Glen Weyl and Mike Whinston for comments/discussions, Yunhao Huang, Keyan Li and Lingxuan “Sean” Wu for exceptional research assistance. White acknowledges financial support for this research from the Chaire Orange de l’innovation & r´egulation. -
Nascent Competitors
Columbia Law School Scholarship Archive Faculty Scholarship Faculty Publications 2020 Nascent Competitors C. Scott Hemphill New York University School of Law, [email protected] Tim Wu Columbia Law School, [email protected] Follow this and additional works at: https://scholarship.law.columbia.edu/faculty_scholarship Part of the Antitrust and Trade Regulation Commons, Internet Law Commons, and the Science and Technology Law Commons Recommended Citation C. Scott Hemphill & Tim Wu, Nascent Competitors, UNIVERSITY OF PENNSYLVANIA LAW REVIEW, VOL. 168, P. 1879, 2020; NEW YORK UNIVERSITY LAW & ECONOMICS RESEARCH PAPER NO. 20-50; COLUMBIA LAW & ECONOMICS WORKING PAPER NO. 645 (2020). Available at: https://scholarship.law.columbia.edu/faculty_scholarship/2661 This Working Paper is brought to you for free and open access by the Faculty Publications at Scholarship Archive. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarship Archive. For more information, please contact [email protected]. ARTICLE NASCENT COMPETITORS C. SCOTT HEMPHILL† & TIM WU†† A nascent competitor is a firm whose prospective innovation represents a serious threat to an incumbent. Protecting such competition is a critical mission for antitrust law, given the outsized role of unproven outsiders as innovators and the uniquely potent threat they often pose to powerful entrenched firms. In this Article, we identify nascent competition as a distinct analytical category and outline a program of antitrust enforcement to protect it. We make the case for enforcement even where the ultimate competitive significance of the target is uncertain, and explain why a contrary view is mistaken as a matter of policy and precedent. -
The Rise of Market Power and the Macroeconomic Implications∗
The Rise of Market Power and the Macroeconomic Implications∗ Jan De Loeckery Jan Eeckhoutz Gabriel Ungerx KU Leuven UPF Barcelona (ICREA, GSE) Harvard University NBER and CEPR and UCL November 15, 2019 Abstract We document the evolution of market power based on firm-level data for the US econ- omy since 1955. We measure both markups and profitability. In 1980, average markups start to rise from 21% above marginal cost to 61% now. The increase is driven mainly by the upper tail of the markup distribution: the upper percentiles have increased sharply. Quite strikingly, the median is unchanged. In addition to the fattening upper tail of the markup distribution, there is reallocation of market share from low to high markup firms. This rise occurs mostly within industry. We also find an increase in the average profit rate from 1% to 8%. While there is also an increase in overhead costs, the markup increase is in excess of overhead. We then discuss the macroeconomic implications of an increase in average market power, which can account for a number of secular trends in the last four decades, most notably the declining labor and capital shares as well as the decrease in labor market dynamism. Keywords: Market Power; Markups; Profits; Secular Trends; Labor Market; Declining Labor Share. JEL: E2, D2, D4, J3, K2, L1 ∗We would like to thank Mark Aguiar, Pol Antras,` John Asker, Eric Bartelsman, Susanto Basu, Steve Berry, Tim Bresnahan, Emmanuel Farhi, Xavier Gabaix, Bob Hall, John Haltiwanger, Eric Hurst, Loukas Karabarbounis, Patrick Kehoe, Pete Klenow, Christian Michel, Ariel Pakes, Thomas Philippon, Esteban Rossi-Hansberg, Chad Syverson, James Traina, Jo Van Biesebroeck and Frank Verboven for insightful discussions and comments. -
The Attention Economy
Vol.2 No.5 - May 5th. 1997 Much recent commentary on the Internet in particular and information society in general has proclaimed the death of economics. Such commentators are either vague about what they mean by economics, or unclear about what is to replace it, completing their arguments with more hype than substance. A few, like Michael Goldhaber in his paper, "The Attention Economy", published in the previous issue of First Monday, have something valuable to say about the way people will trade goods and services, in whatever shape, in the realm of cyberspace. Yet, like Goldhaber - "The old concepts will just not have value in that new context," - even commentators with original thoughts apparently feel that the irrelevance of classical economic ideas must be exaggerated in order that ideas of their own be seriously considered. Perhaps this is true - the information revolution is even more forcefully heralded as panacea or as poison than its agricultural and industrial predecessors, and has been driven by belief in its powers as much as anything - but it hardly serves to clarify our perception of the new revolution's mechanisms. Authors like Goldhaber, perhaps recognising this, start their papers with denunciations of the tools of classical economics, and later go on to use these very tools as they attempt to clarify their ideas. Contents What is economics? Trade, demand and supply The money economy? Tools for reasoning 1 From www.firstmonday.dk/issues/issue2_5/ghosh/index.html 22 December 2004 What is economics? Paul Samuelson provided the textbook definition of economics as the "study of how societies use scarce resources to produce valuable commodities and distribute them among different people." Would this definition apply to the information age - or to life on the Internet? Controversies in current literature relate primarily to the words "scarce", "resource" (and hence "commodity") and "produce". -
Discussion Papers in Economics
Discussion Papers in Economics No. 2008/17 Thinking About It: A Note on Attention and Well-Being Losses From Unemployment No. 2000/62By Paul Dolan, Imperial College and Nattavudh Powdthavee, University of London and Dynamics of Output Growth,University Consumption of York and Physical Capital in Two-Sector Models of Endogenous Growth Department of Economics and Related Studies University of York Heslington York, YO10 5DD Thinking About It: A Note on Attention and Well-Being Losses from Unemployment Paul Dolan1 Tanaka Business School, Imperial College Nattavudh Powdthavee2 University of London and University of York 8th April 2008 Abstract This note investigates Schkade and Kahneman’s (1998) maxim that “Nothing in life is quite as important as you think it is while you are thinking about it”. The paper shows that whilst becoming unemployed hurts psychologically, unemployment has a greater impact on happiness if the person also regards it as an important event that took place in the last year. This finding, particularly if it is replicated for other domains, such as health and income, will have important implications for how we think about the impact of objective circumstances on well-being and about well- being more generally. Key words: happiness; well-being; attention; focusing illusion; unemployment JEL: H0, I0 1 Tanaka Business School, Imperial College London, South Kensington campus, London, SW7 2AZ, UK. Email: [email protected]. Tel: +44(0)20 7594 2075. 2 Department of Quantitative Social Science, Institute of Education, University of London, 55-59 Gordon Square, London, WC1H 0NU, UK. Email: [email protected].