by Kevin Coates | Feb 12, 2010 | Competition
This seems to be my month for guest blogging. Danny Sokol at the Antitrust & Competition Policy Blog asked if I would review Professor Eleanor Fox‘s comparative competition law book, The Competition Law of the European Union in Comparative Perspective, an excellent book that I gave some minor comments on in draft. My review is here on Danny’s...
by Kevin Coates | Jan 20, 2010 | Antitrust, Intellectual Property
The IPKat weblog is a superb resource on a whole range of intellectual property issues, and it is well worth a regular read if you are interested in anything to do with IP in Europe or the US. I took issue at an aside made by the Kat on the subject of IP, monopoly and economists, and the Kat generously invited me to publish a guest post on the weblog. The problem I wanted to highlight is that antitrust law and intellectual property law both refer to “monopolies”, but that – contrary to what some IP lawyers and, to be fair, some caselaw from the early 20th century suggest – the term is used to mean two different things in the different legal disciplines. My guest post is...
by Kevin Coates | Dec 10, 2009 | Net Neutrality
Erik Cecil’s recent post on net neutrality is generating discussion on several mailing lists. I agree with a lot of what Erik says – particularly summing up the underlying problem as “monopoly power in the loop plant”, a point which seems so obvious to my (European, antitrust-influenced) eyes, that I often stare with bemusement at some of the debates (and court judgments) in the US. But I wonder about the implied strategy of abandoning the net neutrality proposals in favour of some form of network access regulation. Calling for net neutrality to be abandoned because it does not address the most fundamental problem reminds me a little of the old joke about the tourist asking the local for directions and receiving the reply, “Well, I wouldn’t start from here.” Although the validity of the 1996 Telecom Act and its unbundling provisions has been upheld in principle, the various FCC attempts to implement unbundling in practice were struck down hard by the courts, seemingly giving little or no deference to FCC discretion. Then with the shift in approach of the FCC under the Bush Administration, came the broadband de-regulation measures of 2003-2005 where first the cable networks, then the telecoms broadband networks were moved out of the scope of Title II of the 1996 Act and into Title I, ruling out any form of mandated third party access. This was upheld in court, with a ruling that seemed to give the FCC significantly more margin for discretion in deregulating, than the FCC had been given in its earlier attempts at regulating: the most notable example, probably being the court agreeing...
by Kevin Coates | Nov 8, 2009 | Economics
What follows are some initial thoughts on how behavioural economics might affect antitrust and regulation. They are not particularly advanced, but some points of the points raised I have not seen elsewhere (even when I remember to search for “behavioral economics” and not just “behavioural economics”). Wikipedia has a good general introduction to behavioural economics, and the European Commission has also published a short overview for the press. (Disclosure: the European Commission is my employer, even though I am on secondment to NYU at the moment. I was not involved in the preparation of that document. All opinions are my own, etc…) There is understandable reluctance by economists to transpose conclusions about the behaviour of individuals to the behaviour of firms: arguably much of the analysis carried out by firms before they decide on a strategy is precisely to widen the bounds of their rationality, avoiding the conceptual limits of individuals. This sidesteps the question, though, of what the implications of behavioural economics should be when an antitrust analysis depends on consumer behaviour. The Microsoft bundling cases in the US and the EU depended in part on how consumers would react to the bundling into Windows of Internet Explorer and Media Player. Given that behavioural economics suggests that consumers are influenced by “defaults” to a greater extent than traditional (rational market) economics would predict, then the negative effects of the bundling on consumer welfare would be greater than that which traditional economics would suggest. Other biases also might be relevant: availability bias – where individuals are disproportionately influenced by highly visible or memorable factors – might suggest that incumbency...
by Kevin Coates | Oct 29, 2009 | Economics
The Origin of Wealth, Eric D Beinhocker, 2006, p116-119 “Imagine you walk into your grocery store and see some tomatoes… You have well-defined preferences for tomatoes compared with everything else you could possibly buy in the world, including bread, milk, and a vacation in Spain. Furthermore, you have well-defined preferences for everything you could possibly buy at any point in the future, and since the future is uncertain, you have assigned probabilities to those potential purchases. For example, I believe that there is a 23 percent chance that in two years, the shelf in my kitchen will come loose and I will need to pay $1.20 to buy some bolts to fix it. The discounted present value of that $1.20 is about $1.00, multiplied by a 23 percent probability, equals an expected value of twenty-three cents for possible future repairs, which I must trade off with my potential purchase of tomatoes today, along with all of my other potential purchases in my life- time. In the Traditional Economics model, all these well-defined preferences are also ordered very logically. So if I prefer tomatoes to carrots, and prefer carrots to green beans, I will always take the tomatoes over the green beans. Likewise, if I prefer tomatoes to carrots, I won’t suddenly go for the carrots simply because I saw some green beans. Traditional Economics also assumes that you know exactly what your budget is for spending on tomatoes. To calculate this budget, you must have fully formed expectations of your future earnings over your entire lifetime and have optimized your current budget on the basis of that knowledge. In...