What do we know about interchange fees and what does it mean for public policy? : commentary on Evans and Schmalensee

Debit cards ; Credit cards

Innovation, Rent Extraction, and Integration in Systems Markets

We consider innovation incentives in markets where final goods comprise two strictly complementary components, one of which is monopolized. We focus on the case in which the complementary component is competitively supplied, and in which innovation is important. We explore ways in which the monopoly may have incentives to confiscate efficiency rents in the competitive sector, thus weakening or destroying incentives for independent innovation. We discuss how these problems are affected if the monopolist integrates into the competitive sector.

Innovation, Rent Extraction, and Integration in Systems Markets

We consider innovation incentives in markets where final goods comprise two strictly complementary components, one of which is monopolized. We focus on the case in which the complementary component is competitively supplied, and in which innovation is important. We explore ways in which the monopoly may have incentives to confiscate efficiency rents in the competitive sector, thus weakening or destroying incentives for independent innovation. We discuss how these problems are affected if the monopolist integrates into the competitive sector.

Tax Analysis in an Oligopoly Model

In this paper we analyze taxation using the conjectural variations model of oligopoly. We demonstrate the way in which the incidence of a tax depends upon the pattern of firm interaction. The results obtained have important implications for the controversy surrounding the question of whether a tax oncorporate income can be over-shifted. We also study normative aspects of taxation. The focus here is on the errors that can arise in excess burden calculations when incorrect assumptions on market structure are made.

Merger Policy and Innovation: Must Enforcement Change to Account for Technological Change?

Merger policy is the most active area of U.S. antitrust policy. It is now widely believed that merger policy must move beyond its traditional focus on static efficiency to account for innovation and address dynamic efficiency. Innovation can fundamentally affect merger analysis in two ways. First, innovation can dramatically affect the relationship between the pre-merger marketplace and what is likely to happen if a proposed merger is consummated. Thus, innovation can fundamentally influence the appropriate analysis for addressing traditional, static efficiency concerns. Second, innovation can itself be an important dimension of market performance that is potentially affected by a merger. We explore how merger policy is meeting the challenges posed by innovation.

An Economist's Guide to U.S. v. Microsoft

We analyze the central economic issues raised by U.S. v Microsoft. Network effects and economies of scale in applications programs created a barrier to entry for new operating system competitors, which the combination of Netscape Navigator and the Java programming language potentially could have lowered. Microsoft took actions to eliminate this threat to its operating system monopoly, and some of Microsoft's conduct very likely harmed consumers. While we recognize the risks of the government's proposed structural remedy of splitting Microsoft in two, we are pessimistic that a limited conduct remedy would be effective in this case.

If one finger brought oil, it soiled the others : The Ideas of Cultural Orthodoxy and Critique and Subjectivity and Friendship in Things Fall Apart

The story of this man who had killed a messenger and hanged himself would make interesting reading. One could almost write a whole chapter on him. Perhaps not a whole chapter but a reasonable paragraph at any rate...He had already chosen the title of the book, after much thought: The Pacification of the Primitive Tribes of the Lower Niger. Chinua Achebe\u27s classic novel Things Fall Apart concludes with the above lines. The protagonist of the book, Okonkwo, has committed suicide, and upon finding the body, the English District Commissioner of the Lower Niger thinks that this man, who has had a whole book written about him, does not merit an entire chapter written about him. In thinking this, the District Commissioner enters into one of the great conflicts between the West and Africa: the assumption that Africans have no sense of self, and, consequently, are not viable subjects