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Are we kidding ourselves on competition?
The traditional textbook model of competition in an oligopoly goes likes this. Firms choose prices and other variables (like product quality, advertising and R&D) to maximise their own profits and disregard the impact of their actions on (a) competing firms and (b) consumers; although with the latter since they want them to buy products they …
Is it good to have market power amongst music labels?
No. That is usually a fairly obvious answer regardless of the firms involved but, according to Felix Salmon the answer is, instead, ‘yes.’ Here is his argument: Small labels are a real headache for digital music services, especially when they have ulterior motives, or are controlled by capricious artists. The majors can be counted on to drive …
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Annals of Antitrust Smells: Retailers dropping Apple Pay and Google Wallet
Antitrust economics has its analytical side. But sometimes you hear a story — and you know you don’t have the full story — but it just carries with it a stench that something is awry. The odor that wafted from my iPad this morning when I read this was quite strong. There's a lot of hype around …
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Amazon: it’s not the power, it’s the lost focus
Since Paul Krugman wandered into my field of economics today, I thought this might be an opportune moment to recount various things I have said about Amazon and its dispute with Hachette over the last few months. Krugman’s problem: Amazon has too much power, plain and simple. Well, it isn’t that plain or simple.First, if Amazon has …
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Tirole and Pasteur
There are lots of criteria that we use to think about why someone should win a Nobel prize. There is creative genius, there are pioneering findings but, in reality, the dominant criteria is impact. The tough issue is usually "impact on what?" Because being at the frontier is difficult, most specialise in their impact. To be …
The Two Amazons: The Disruptor and the Architect
Over the last month, I outlined four broad entrepreneurial strategies that start-up ventures could choose between. The idea was that they had to focus on just one because (a) they had limited resources and (b) that the four choices were, in fact, substitutes. But Amazon has become a puzzle in this more recently and I …
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My letter to Hachette's CEO
Amazon asked authors and readers to write to Hachette's CEO regarding this debate. Here is mine: Dear Mr Pietsch I am writing to you at the request of Amazon but, in fact, it is to plea with you to ask them some important, but as yet unasked, questions. This …
Amazon makes its case against Hachette
Well, after months of this, Amazon has taken up a new strategy in its dispute with Hachette -- to tell us what they want and why. Suffice it to say, this is an approach that we can only welcome as it allows us to delve deeper into the dispute and the nature of book publishing …
The Two Entrepreneurial Paths to Monopoly
It is always interesting when two famous entrepreneurs disagree on something fundamental. In this case, it is Marc Andreessen and Peter Thiel. Here is Marc Andreessen's recent tweet. Something my friend & hero Peter Thiel and I vigorously disagree on: I *love* competition, I think it's invigorating/stimulating/productive. — Marc Andreessen (@pmarca) June 30, 2014 //platform.twitter.com/widgets.jsPut …
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Digitopoly 