Category Archives: Intellectual Property and Antitrust

FTC’s Joshua Wright Lectures at Clemson on April 2 — Video archive available

FTC Commissioner Josh Wright

Federal Trade Commissioner Joshua D. Wright presented a Big Ideas About Information lecture on April 2, 2015 at Clemson University.   Sponsored by the Information Economy Project and the John E. Walker Department of Economics, Commissioner Wright spoke on Regulation in High-Tech Markets: Public Choice, Regulatory Capture, and the FTC.  

A prolific scholar in law and economics, Joshua Wright was appointed to the Federal Trade Commission by President Obama in January 2013. Commissioner Wright’s lecture focused on the tendency for regulatory regimes to frustrate technological innovation. An example is the tax industry, heavily regulated for almost a century.

Thierer and Skorup on Tim Wu’s Separations Principle

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IEP’s Brent Skorup and Adam Thierer, senior research fellow at the Mercatus Center, have published a law review article on vertical integration in the information economy in the Federal Communications Law Journal. From the abstract:

Are information sectors sufficiently different from other sectors of the economy such that more stringent antitrust standards should be applied to them preemptively? Columbia Law School professor Tim Wu responds in the affirmative in his book The Master Switch: The Rise and Fall of Information Empires. Wu proposes preventing vertical mergers in the information economy and the mandatory divestiture of vertically integrated companies. To implement this, Wu proposes a Separations Principle for the information economy, which would segregate information providers into three buckets, which we have labeled information creators, information distributors, and hardware makers.

This article outlines Wu’s separations proposal, explains why his fears regarding vertical relationships should be rejected by regulatory and antitrust policymakers, and illustrates the legal and practical problems his Separations Principle poses. Wu justifies his Separations Principle by citing monopolies and market power in the information economy. He also advocates using U.S. antitrust authorities to enforce his Principle.

We argue that the antitrust harms he fears are not present, and we highlight scholarship on the accepted benefits of vertically integrated firms. We show that Wu’s remedies are policy preferences wrapped in the language of competition law. In fact, the information economy is largely competitive and does not warrant interventionist regulatory enforcement. Since much of American economic vitality flows from the information economy and technology, policymakers should reject a radical antitrust remedy like Wu’s preemptive Separations Principle.

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Policy-Induced Competition: The Case of Cable TV Set-Top Boxes

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12 Minn. J.L. Sci. & Tech. 279 (2011).  Ralitza A. Grigorova-Minchev, Vice President, Arlington Economics, Thomas W. Hazlett, Professor of Law & Economics, George Mason University School of Law.

“…This failure is, in less glossy reports, the assessment of the FCC itself. In the Commission’s words, the CableCARD technology developed to facilitate modular conformity of competing devices has “failed to stimulate a competitive retail market for set-top boxes.” The top two cable STB manufacturers in North America, Motorola and Cisco, both supply their STBs through cable providers and account for an estimated ninety-five per-cent of the units’ shipments over the first three quarters in 2009. In contrast, “there are 0.5 million CableCARDS deployed in retail devices today, which represent approximately 1% of all set-top boxes deployed in cable homes.” There are only two manufacturers, TiVo and Moxi, that “continue to sell Cab-leCARD-enabled set-top boxes through retail outlets.”

The experience of the FCC’s attempt to create a “policy-induced competition” is important on its own and for its more general implications. In many services, particularly in telecommunications, regulators have sought to restrict vertical integration so as to leave complements free to compete. Classically, this was the approach in the old Bell System following the Carterfone mandate, which allowed non-AT&T equipment—notably, telephones and switches—to access standard interfaces as plug-in devices. The result was that, even while phone networks maintained monopoly services for voice and data transport, competitive rivalry developed with respect to network-connected devices.”

Minnesota J. of L. Sci. & Tech. Download

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