Tag Archives: Robert Hahn

The Effect of Allowance Allocation on Cap-and-Trade System Performance

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Coase Conference: Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase, University of Chicago Law School. Robert W. Hahn, Senior Visiting Fellow, Smith School, Oxford, Robert N. Stavins, Albert Pratt Professor of Business and Government, Harvard Kennedy School.

We begin with “The Problem of Social Cost” (1960) … The Coase Theorem: Bilateral negotiation between the generator and recipient of an externality leads to the same efficient outcome regardless of the initial assignment of property rights (if no transaction costs, income effects, or third-party impacts).

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Articles from Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase

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The Information Economy Project is proud to present articles that will be published in a special joint issue of the Journal of Law & Economics and Journal of Legal Studies, from the Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase held on December 4-5, 2009:

Conference Articles:

Friday Sessions

The Effect of Allowance Allocation” by Robert W. Hahn & Robert N. Stavins.  We begin with “The Problem of Social Cost” (1960) … The Coase Theorem: Bilateral negotiation between the generator and recipient of an externality leads to the same efficient outcome regardless of the initial assignment of property rights (if no transaction costs, income effects, or third-party impacts).

Coase, Transaction Costs, and the Spread of the Rectangular Survey for Land Demarcation within the British Empire” by Gary D. Libecap, Dean Lueck, Trevor O’Grady.  This paper examines adoption of the rectangular system (RS) of land demarcation within European settlement colonies of the British Empire in the 18th and 19th centuries. This was a time when agricultural land markets were first developing on a widespread scale. These jurisdictions had similar immigrant populations and legal structures, but their land demarcation practices were quite different.

Coase and the New Zealand Spectrum Reforms” by Charles L. Jackson. In 1989, New Zealand’s Parliament enacted a new statute, the Radiocommunications Act 1989, that explicitly used a system of property rights to regulate the use of the radio spectrum. This statute resulted in the first ever spectrum auctions – and New Zealand’s use of auctions has been copied around the globe. New Zealand’s adoption of a property rights regime, a more fundamental change than the introduction of spectrum auctions, has not had the same wide acceptance.

Radio Spectrum and the Disruptive Clarity of Ronald Coase” by Thomas W. Hazlett, David Porter, Vernon Smith. In the Federal Communications Commission,5 Ronald Coase exposed deep foundations via normative argument buttressed by astute historical observation. The government controlled scarce frequencies, issuing sharply limited use rights. Spillovers were said to be otherwise endemic. Coase saw that Government limited conflicts by restricting uses; property owners perform an analogous function via the “price system.” The government solution was inefficient unless the net benefits of the alternative property regime were lower.

Why the Entry Regulation of the China Mobile Phone Manufacturing Industry Collapsed” by Zhimin Liao, Xiaofang Chen. This case study aims to explore an interesting puzzle: why the license regulation in China’s mobile phone production industry, which generated large rents for an once powerful interest group, was suddenly eliminated.

How to Keep a Secret: The Decisive Advantage of Corporations” by Robert Cooter.  In the 1950s socialists around the world built gigantic steel plants like Nowa Huta in Poland. By the 1980s they were losing vast amounts of money and they seemed destined to die a slow death by rust. Lakshmi Mittal, who led the international operation of an Indian steel business built by his father, believed that these industrial dinosaurs could flourish in the age of mammals.

Regulatory Institutions and Economic Performance: Wireless Communications in Middle-Income Developing Nations” by Roger Noll.  Wireless Success Story: Over 4 billion wireless subscribers worldwide in 2009 (compared to 1.3 billion wire lines) Wireless penetration in developing nations around 50% of population, over 100% in some middle income nations (several higher than US = 90%) 2. Generally good1 policies in nations not noted for good economic policies Mostly privatized Multiple firms (3+ in most nations) Permit foreign ownership Narrow, targeted regulation Licenses transferable.

Saturday Sessions

Competence as a Random Variable: One More Tribute to Ronald Coase” by Richard A. Epstein. The work of Ronald Coase is notable for how it introduces the notion of transactions costs to explain both the creation and maintenance of firms and for understanding the larger question of social costs. Nonetheless, it seems improbable that positive transaction costs are the only explanation as to why and how firms are organized.

R.H. Coase and the Neoclassical Model of the Economic System” by Harold Demsetz. It is clear from articles I have written for the New Palgrave Dictionary of Law and Economics and other publications that I have high regard for Coase and his works. Some would say I have published parts of his works more times than has he. True or not, my role in explaining, defending, and extending Ronald’s writings has left me with little to say that is different from what I have already written, so my theme today is not a product of conscious deliberation.

Measuring Coase’s Influence” by William M. Landes and Sonia Lahr-Pastor. Citations measure a scholar’s influence. That Ronald Coase is among the most influential and best-cited economists in the past fifty years is not debatable. Two of his articles, “The Nature of the Firm”, published in 1937, and “The Problem of Social Cost”, published in 1960, are among the most-cited articles in both economics and law and continue to be widely cited.

Regulation and the Nature of the Firm: The Case of U.S. Regional Airlines” by Michael E. Levine. The organization of airline networks, and particularly of the interaction between the less dense parts of the network with the more dense parts, is a particularly good example of the operation of two of Professor Coase’s main points in “The Nature of the Firm” and subsequent articles: first, that the choice of institutions chosen to organize production is a function of economic circumstances, including regulation, technology and contractual arrangements inside the firm and second, that there is no general outcome that economic theory predicts, but rather that the result always depends on the particular circumstances and choices available and that it will change as circumstances change.

Commercial Advertising and the First Amendment” by Geoffrey R. Stone. In his path-breaking 1977 article, Advertising and Free Speech, Ronald Coase challenged the conventional wisdom in an important area of First Amendment law. What especially interested Coase was the sharp divergence between the profound commitment to the free market in the realm of speech and the lack of confidence in the free market in the realm of goods and services. Invoking Justice Holmes’s claim that “the best test of truth is the power of the thought to get itself accepted in the competition of the market,” Coase noted that First Amendment doctrine is largely premised on “an extreme faith in the efficiency of competitive markets and a profound distrust of government regulation.” But in the realm of “goods and services,” the same “intellectual community” that celebrates the marketplace of ideas demands ever-more extensive government regulation. Coase suggested that this disparity “calls for an explanation,” but lamented that such an explanation “is not easy to find.”

Keynes and Coase” by Richard A. Posner.  I am sure that Ronald will not like my bracketing him with Keynes, as I am about to do. But if he is patient, he will hear me modify criticisms of his approach to economics that I made in an essay I wrote many years ago – sixteen to be exact – for the Journal of Economic Perspectives.

 

This entry is part 2 of 5 in the series Coase Conference 2009

Articles from the Merger Analysis in High Technology Markets Conference

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The Information Economy Project is proud to present articles that have been published in the Journal of Competition Law & Economics from the Merger Analysis in High Technology Markets Conference held on February 2, 2008:

Technological Change and Merger Policy’s Third Era, by Howard Shelanski (Feb. 1 2008). Excerpt: Changes in Merger Policy Over the Last Century. Evolutionary Changes: Antimonopoly Era (1904-1973), Consumer Welfare Era (1973-2004), Dynamic Efficiency Era (2004-). Cyclical Changes: Merger review has varied in the scope of its objectives: from narrow anti-bigness => broader balance of efficiency and small-business protection => narrow consumer welfare focus => broader balance of static efficiency and innovation.

Market Definition in Online Markets, by Michael Baye, Journal of Competition Law & Economics, 4(3), 639–653 (Sept. 2008). Excerpt: Although the basic principles used to define a relevant market or to analyze unilateral competitive effects in traditional retail settings also apply in online retail markets, several features of the online environment add complexities to the analysis. This paper examines some of the results in the economics and marketing literatures that can influence market definition and competitive effects analysis in online retail settings. I argue that a failure to account properly for certain aspects of online markets can lead to erroneous definitions of the relevant market and, more importantly, erroneous conclusions regarding the unilateral competitive effects of horizontal mergers.

Sky Wars: The Attempted Merger of Dish/DirecTV, by Richard Gilbert (Feb. 1 2008). Excerpt: A High Tech Merger? Relatively new product: High Power Direct Broadcast Satellite TV. DirecTV launched 1994. EchoStar/Dish launched 1996. Large claimed efficiencies. Platform issues. Incompatible encryption formats. Dynamic platform competition. Installed base pricing incentives.

Defining the Relevant Product Market for the Google-DoubleClick Merger
, by Hal Singer & Robert W. Hahn (Feb. 1 2008). Excerpt: Industry Background: In 2007, U.S. advertisers were expected for the first time to spend more on online advertising than on radio advertising. Source: eMarketer. U.S. online advertising revenues in 2007: were roughtly $17 billion, an increase of 35 percent over 2005 revenues. Source: Interactive Advertising Bureau.

Nice Theory, But Where’s the Evidence?: The Use of Economic Evidence to Evaluate Vertical and Conglomerate Mergers in the U.S. and E.U., by Mary T. Coleman (Feb. 1 2008). Excerpt: Overview: Brief description of primary vertical theories of potential competitive concern from a merger. Input foreclosure. Customer foreclosure. Elements for a vertical theory to be plausible. Ability to foreclose. Incentive to foreclose. Foreclosure is likely to harm competition. Efficiencies do not offset. Evidence related to each element.

Horizontal Mergers Among IP Licensors and IP Licensees, by Luke Froeb (Feb. 1 2008). Excerpt: Joint Work: Mike Shor, Steven Tschantz. Disclaimer: Exploratory Analysis. Outline: Motivation: merger analysis. Question 1: Are horizontal merger effects affected by upstream/downstream vertical relationships? Question 2: What Happens when you ignore upstream and/or downstream vertical relationships?

Are ‘Online Markets’ Real and Relevant? From Monster/Hotjobs to Google/DoubleClick, by Bruce D. Abramson, Journal of Competition, Law and Economics (Feb. 1 2008). Excerpt: Key Conclusions: As the novelty of the Internet wears off, on-line merger analysis looks increasingly like off-line merger analysis. Most of the things that make interesting on-line mergers interesting have little to do with competition. A Blast from (My) Past: During the summer of 2001, HotJobs retained my services to support its proposed acquisition by Monster.com. One of the first “major”mergers of Internet “pure plays.” Basic points of interest stemmed from shift in understanding of Internet economics between 2000 (documents) and 2001 (facts). See, From Investor Fantasy to Regulatory Nightmare: Bad Network Economics and the Internet’s Inevitable Monopolists 16 Harv. J. L. Tech. 159 (2002).

Antitrust in Orbit: Some Dynamics of Horizontal Merger Analysis in General and with Respect to XM-Sirius, by Thomas W. Hazlett, Journal of Competition Law & Economics, 4(3), 753–773 (Sept. 2008). Excerpt: Horizontal merger evaluation is heavily reliant on market definition. An SSNIP framework formats the analysis, and demand elasticity evidence used to apply the test is often sparse, as is often found in high-technology industries. This paper examines other sources of evidence that reveal the dynamics of market structure, data that are also probative in the evaluation of competitive effects. These sources include capital valuations of firms, financial event studies, and the public positions taken with respect to the merger by interested parties. Such evidence is examined in the XM–Sirius merger (2007–08) and shown—in two of the three instances—to be relatively informative in merger welfare analysis.

Evaluating Market Power with Two-Sided Demand and Preemptive Offers to Dissipate Monopoly Rent: Lessons for High-Technology Industries from the Proposed Merger of XM and Sirius Satellite Radio, by J. Greg Sidak and Hal J. Singer, Journal of Competition Law & Economics, 4(3), 697–751 (Sept. 2008). Excerpt: Can the standard merger analysis of the Department of Justice’s and Federal Trade Commission’s Horizontal Merger Guidelines accommodate mergers in high-technology industries? In its April 2007 report to Congress, the Antitrust Modernization Commission (AMC) answered that question in the affirmative. Still, some antitrust lawyers and economists advocate exceptions to the rules for particular transactions. In the proposed XM–Sirius merger, for example, proponents argue that the Merger Guidelines be relaxed to accommodate their transaction because satellite radio is a nascent, high-technology industry characterized by “dynamic demand.”

This entry is part 2 of 3 in the series High Tech Merger Conference 2008