Competition, Consumer Welfare, and the Social Cost of Monopoly

Conventional deadweight loss measures of the social cost of monopoly ignore, among other things, the social cost of inducing competition and thus cannot accurately capture the loss in social welfare. In this Article, we suggest an alternative method of measuring the social cost of monopoly. Using elements of general equilibrium theory, we propose a social cost metric where the benchmark is the Pareto optimal state of the economy that uses the least amount of resources, consistent with consumers' utility levels in the monopolized state. If the primary goal of antitrust policy is the enhancement of consumer welfare, then the proper benchmark is Pareto optimality, not simply competitive markets. We discuss the implications of our approach for antitrust law as well as how our methodology can be used in practice for allegations of monopoly power given a history of price-demand observations.Monopoly power, Antitrust economics, Applied general equilibrium

Competition, Consumer Welfare, and the Social Cost of Monopoly

Conventional deadweight loss measures of the social cost of monopoly ignore, among other things, the social cost of inducing competition and thus cannot accurately capture the loss in social welfare. In this Article, we suggest an alternative method of measuring the social cost of monopoly. Using elements of general equilibrium theory, we propose a social cost metric where the benchmark is the Pareto optimal state of the economy that uses the least amount of resources, consistent with consumers’ utility levels in the monopolized state. If the primary goal of antitrust policy is the enhancement of consumer welfare, then the proper benchmark is Pareto optimality, not simply competitive markets. We discuss the implications of our approach for antitrust law as well as how our methodology can be used in practice for allegations of monopoly power given a history of price-demand observations

The Meme Stock Frenzy: Origins and Implications

In 2021, several publicly traded companies, such as GameStop and AMC, became “meme stocks,” experiencing a sharp rise in their stock prices through a dramatic influx of retail investors into their shareholder base. Analyses of the meme stock surge and its implications for corporate governance have focused on the idiosyncratic creation of online communities around particular stocks during the COVID-19 pandemic. In this Article, we argue that the emergence of meme stocks is part of longer-running digital transformations in trading, investing, and governance. On the trading front, the sudden abolition of commissions by major online brokerages in 2019 reduced entry costs for retail investors. Zero-commission trading represents a modification of the payment for order flow (PFOF) system, which is itself a product of technological disruptions in the financial markets in the 1980s. With respect to investing, the emergence of social media communication amplified retail investors’ pre-existing dependence on social networks to make decisions regarding stock market entry and portfolio construction. It also allowed them to coordinate their investing activities and affect the market price while expressing their non-financial interests. Finally, while some startups have attempted to bring the shareholder experience into the digital age and help retail investors participate in governance, these developments have been relatively modest. After tracing the meme stock phenomenon, we sketch a research agenda for law and finance scholars to explore the concrete effects of meme investing on corporate governance outcomes. First, we ask whether retail traders can transform into enthusiastic retail shareholders engaged in corporate governance. Second, we propose a broader metric for “meme-ness”: future scholarship can use modern advances in data science to better identify which companies are vulnerable to meme surges and social media-driven investing unrelated to their financial fundamentals

Meme Corporate Governance

Can retail investors revolutionize corporate governance and make public companies more responsive to social concerns? The U.S. stock market offered an unusual experiment to test the impact of retail investors in 2021, when there was a dramatic influx of retail investors into the shareholder base of companies such as GameStop and AMC. The meme surge phenomenon elicited a variety of reactions from scholars and practitioners. While some worried that affected companies’ share prices were becoming disjointed from their financial fundamentals, others predicted that retail shareholders will reduce the power of large institutional investors and democratize corporate governance. This Article presents the first empirical analysis of the impact of retail investors on the governance of companies affected by the “meme stock surge.” The Article presents three principal findings. First, we show how the “meme stock” frenzy was affected by the introduction of the commission-free trading platform, such as Robinhood, in 2019. We show that the meme stock companies experienced higher abnormal stock returns when commission-free trading was widely introduced, and saw elevated trading volumes afterward. Second, we examine how the influx of retail shareholders has directly affected the governance outcomes at the meme stock companies. Notwithstanding the promise of a more active retail shareholder base, we show that meme stock companies have experienced a significant decrease in participation by their shareholders with respect to voting. Shareholder proposals under Rule 14a-8 have also been extremely limited, with most meme firms seeing no proposals brought after the rapid increase in retail ownership. Third, we examine whether the increase in retail shareholder base had any indirect effect on corporate governance and performance. While board gender diversity at these firms is broadly unchanged, their ESG scores have gotten worse subsequent to the meme surge. Examining meme firms’ use of corporate funds, we find decreases in research and development and capital expenditures after the meme surge. Collectively, our findings suggest that the influx of retail shareholders at these companies have not translated into more “democratic” governance regimes or reduced agency costs, even at firms the scholarly and popular commentary had highlighted as the cynosure of the retail investor storm

Th17 Responses Are Not Induced in Dextran Sodium Sulfate Model of Acute Colitis

Dextran sodium sulfate (DSS) is a widely used chemical model for inflammatory bowel disease (IBD). It is thought that imbalances in the T helper (Th) cell subsets contribute to IBD. Recent studies suggest that the acute DSS-colitis model is polarized toward a Th1/Th17 profile based on RT-PCR analysis of colonic tissues. In the current study we determined whether colonic Th cells from DSS-colitis mice were skewed toward the Th17 profile. Mice were treated with 5% DSS for 7 days and colonic T cells isolated and examined for production of IFN-γ (Th1 cell), IL-4 (Th2 cell) and IL-17 (Th17 cell) by intracellular flow cytometry. We found that the percentage of colonic Th17 cells were similar to non-treated controls but the percentage of Th1 cells were elevated in DSS-colitis mice. These results suggest that in the acute DSS-colitis model the colonic Th cells exhibit a Th1 profile and not a Th17 profile

Post-intervention Status in Patients With Refractory Myasthenia Gravis Treated With Eculizumab During REGAIN and Its Open-Label Extension

OBJECTIVE: To evaluate whether eculizumab helps patients with anti-acetylcholine receptor-positive (AChR+) refractory generalized myasthenia gravis (gMG) achieve the Myasthenia Gravis Foundation of America (MGFA) post-intervention status of minimal manifestations (MM), we assessed patients' status throughout REGAIN (Safety and Efficacy of Eculizumab in AChR+ Refractory Generalized Myasthenia Gravis) and its open-label extension. METHODS: Patients who completed the REGAIN randomized controlled trial and continued into the open-label extension were included in this tertiary endpoint analysis. Patients were assessed for the MGFA post-intervention status of improved, unchanged, worse, MM, and pharmacologic remission at defined time points during REGAIN and through week 130 of the open-label study. RESULTS: A total of 117 patients completed REGAIN and continued into the open-label study (eculizumab/eculizumab: 56; placebo/eculizumab: 61). At week 26 of REGAIN, more eculizumab-treated patients than placebo-treated patients achieved a status of improved (60.7% vs 41.7%) or MM (25.0% vs 13.3%; common OR: 2.3; 95% CI: 1.1-4.5). After 130 weeks of eculizumab treatment, 88.0% of patients achieved improved status and 57.3% of patients achieved MM status. The safety profile of eculizumab was consistent with its known profile and no new safety signals were detected. CONCLUSION: Eculizumab led to rapid and sustained achievement of MM in patients with AChR+ refractory gMG. These findings support the use of eculizumab in this previously difficult-to-treat patient population. CLINICALTRIALSGOV IDENTIFIER: REGAIN, NCT01997229; REGAIN open-label extension, NCT02301624. CLASSIFICATION OF EVIDENCE: This study provides Class II evidence that, after 26 weeks of eculizumab treatment, 25.0% of adults with AChR+ refractory gMG achieved MM, compared with 13.3% who received placebo

Minimal Symptom Expression' in Patients With Acetylcholine Receptor Antibody-Positive Refractory Generalized Myasthenia Gravis Treated With Eculizumab

The efficacy and tolerability of eculizumab were assessed in REGAIN, a 26-week, phase 3, randomized, double-blind, placebo-controlled study in anti-acetylcholine receptor antibody-positive (AChR+) refractory generalized myasthenia gravis (gMG), and its open-label extension