Digital Commons Network^™

Dynamic Pricing Algorithms, Consumer Harm, And Regulatory Response, Alexander Mackay, Samuel Weinstein

Articles

Pricing algorithms are rapidly transforming markets, from ride-sharing, to air travel, to online retail. Regulators and scholars have watched this development with a wary eye. Their focus so far has been on the potential for pricing algorithms to facilitate explicit and tacit collusion. This Article argues that the policy challenges pricing algorithms pose are far broader than collusive conduct. It demonstrates that algorithmic pricing can lead to higher prices for consumers in competitive markets and even in the absence of collusion. This consumer harm can be initiated by a single firm employing a superior pricing algorithm. Higher prices arise from …

Regulating New Tech: Problems, Pathways, And People, Cary Coglianese

All Faculty Scholarship

New technologies bring with them many promises, but also a series of new problems. Even though these problems are new, they are not unlike the types of problems that regulators have long addressed in other contexts. The lessons from regulation in the past can thus guide regulatory efforts today. Regulators must focus on understanding the problems they seek to address and the causal pathways that lead to these problems. Then they must undertake efforts to shape the behavior of those in industry so that private sector managers focus on their technologies’ problems and take actions to interrupt the causal pathways. …

Navigating The Transition To A More Innovation-Centric Antitrust (Review Of Richard J. Gilbert, Innovation Matters), Jonathan Baker

Book Reviews

Review of Richard J. Gilbert Innovation Matters: Competition Policy for the High-Technology Economy MIT Press 2020

Is The Digital Economy Too Concentrated?, Jonathan Klick

All Faculty Scholarship

Concentration in the digital economy in the United States has sparked loud criticism and spurred calls for wide-ranging reforms. These reforms include everything from increased enforcement of existing antitrust laws, such as challenging more mergers and breaking up firms, to an abandonment of the consumer welfare standard. Critics cite corruption and more systemic public choice problems, while others invoke the populist origins of antitrust to slay the digital Goliaths. On the other side, there is skepticism regarding these arguments. This chapter continues much of that skepticism.

Antitrust's "Curse Of Bigness" Problem, D. Daniel Sokol

UF Law Faculty Publications

Tim Wu’s most recent book, The Curse of Bigness: Antitrust in the Gilded Age, is an attempt to reframe contemporary antitrust debates by returning antitrust to its more populist roots. Given the global implications of his ideas and policy proposals (including breakup of tech platforms) for many of the large corporations that he takes on, The Curse of Bigness offers profound insights for how society and business should be organized. The first part of this Review summarizes Wu’s major claims. It then highlights some of his critiques as to “bigness,” the multiple goals of antitrust, and the missed opportunities as …

Welcome And Introductory Remarks, Jonathan Baker

Presentations

Video link: https://vimeo.com/352303633Audio link: https://www.ftc.gov/news-events/audio-video/audio/economics-big-data-privacy-competition-introductionThe Federal Trade Commission held the sixth session in its Hearings initiative, with two and a half days of sessions on November 6 – 8, 2018, at American University Washington College of Law, in Washington, D.C.The hearings examined the role that data play in competition and innovation and will also consider the antitrust analysis of mergers and firm conduct where data is a key asset or product.The Commission invited public comment on these issues, including the questions listed below. Comments were due January 7, 2019. If any entity has provided funding for research, analysis, or commentary …

Patent Pool Outsiders, Michael Mattioli

Articles by Maurer Faculty

Individuals who decline to join cooperative groups — outsiders — raise concerns in many areas of law and policy. From trade policy to climate agreements to class action procedures, the fundamental concern is the same: a single member of the group who drops out could weaken the remaining union. This Article analyzes the outsider problem as it affects patents.

The outsider question has important bearing on patent and antitrust policy. By centralizing and simplifying complex patent licensing deals, patent pools conserve tremendous transaction costs. This allows for the widespread production and competitive sale of many useful technologies, particularly in the …

A Solution In Search Of A Problem At The Biologics Frontier, Erika Lietzan

Faculty Publications

This short paper comments on Professor Carrier's new article, Biologics: The New Antitrust Frontier. His article makes a profound initial contribution to a new area of scholarship, based on a large body of prior work considering antitrust issues relating to small molecule drugs. But Professor Carrier’s article, like my own forthcoming piece on innovation and competition in the biologics marketplace, is inherently speculative. We are making our best judgments about the nature of a still emerging marketplace and likely conduct in that marketplace, based on our understandings of a new regulatory framework that is itself still emerging, the broader legal …

Reasonable Patent Exhaustion, Herbert J. Hovenkamp

All Faculty Scholarship

A lengthy tug of war between the Supreme Court and the Federal Circuit Court of Appeals may have ended when the Supreme Court held that the sale of a patented article exhausts the patentee seller’s rights to enforce restrictions on that article through patent infringement suits. Further, reversing the Federal Circuit, the parties cannot bargain around this rule through the seller’s specification of conditions stated at the time of sale, no matter how clear. No inquiry need be made into the patentee’s market power, anticompetitive effects, or other types of harms, whether enforcement of the condition is socially costly or …

Antitrust And The Design Of Production, Herbert J. Hovenkamp

All Faculty Scholarship

Both economics and antitrust policy have traditionally distinguished “production” from “distribution.” The former is concerned with how products are designed and built, the latter with how they are placed into the hands of consumers. Nothing in the language of the antitrust laws suggests much concern with production as such. Although courts do not view it that way, even per se unlawful naked price fixing among rivals is a restraint on distribution rather than production. Naked price fixing assumes a product that has already been designed and built, and the important cartel decision is what should be each firm’s output, or …

Market Power In The U.S. Economy Today, Jonathan Baker

Presentations

Market concentration measures the extent to which market shares are concentrated between a small number of firms. It is often taken as a proxy for the intensity of competition. Indeed, in recent years changes in concentration have increasingly been used to argue that the intensity of competition is falling, that the growth of large firms with high market shares is driving up profits, damaging innovation and productivity, and increasing inequality. Some have argued that the competition rules need to be rewritten and a crackdown by overly antitrust agencies is required. The simplicity of this framing has found supporters across the …

Troubled Waters Between U.S. And European Antitrust, D. Daniel Sokol

UF Law Faculty Publications

Antitrust is an important area of law and policy for most companies in the world. Having divergent rules across antitrust systems means that the same economic behavior may be treated differently depending on the jurisdiction, leading to disparate outcomes in which one jurisdiction finds illegal behavior (but the other does not) when the underlying behavior may be pro-competitive. This disparate set of outcomes creates a world in which the most stringent antitrust system may produce the global standard. As a result, if the antitrust rules applied are too rigid, they threaten to hurt consumers not merely in the jurisdiction where …

Understanding Online Markets And Antitrust Analysis, D. Daniel Sokol, Jingyuan Ma

UF Law Faculty Publications

Antitrust analysis of online markets is a hot topic around the world. In a number of jurisdictions, online markets already have been subject to antitrust review in merger or conduct cases. In other jurisdictions, these issues are in a nascent stage of policy. A number of lessons can be learned from the cases to date involving online markets with regard to optimal antitrust policy. What these cases tend to share are some basic features as to how online markets work. Some jurisdictions understand the particular dynamics of multi-sided online markets. Other competition authorities sometimes may misidentify these markets. This essay …

Open Source, Modular Platforms, And The Challenge Of Fragmentation, Christopher S. Yoo

All Faculty Scholarship

Open source and modular platforms represent two powerful conceptual paradigms that have fundamentally transformed the software industry. While generally regarded complementary, the freedom inherent in open source rests in uneasy tension with the strict structural requirements required by modularity theory. In particular, third party providers can produce noncompliant components, and excessive experimentation can fragment the platform in ways that reduce its economic benefits for end users and app providers and force app providers to spend resources customizing their code for each variant. The classic solutions to these problems are to rely on some form of testing to ensure that the …

Tesla, Dealer Franchise Laws, And The Politics Of Crony Capitalism, Daniel A. Crane

Articles

Public choice theory has long proclaimed that business interests can capture regulatory processes to generate economic rents at the expense of consumers. Such political exploitation may go unnoticed and unchallenged for long time periods because, though the rents are captured by a relatively small number of individuals or firms, the costs are widely diffused over a large number of consumers. The triggering event to expose and mobilize opposition to the regulatory capture may not arise until a new technology seeks to challenge the incumbent technology, thus creating a motivated champion to expose and oppose the regulatory capture and advocate for …

Antitrust And Regulating Big Data, D. Daniel Sokol, Roisin E. Comerford

UF Law Faculty Publications

The collection of user data online has seen enormous growth in recent years. Consumers have benefited from this growth through an increase in free or heavily subsidized services, better quality offerings, and rapid innovation. At the same time, the debate about Big Data, and what it really means for consumers and competition, has grown louder. Many have focused on whether Big Data even presents an antitrust issue, and whether and how harms resulting from Big Data should be analyzed and remedied under the antitrust laws. The academic literature, however, has somewhat lagged behind the policy debate, and a closer inspection …

Telecommunications: Competition Policy In The Telecommunications Space, Gene Kimmelman, Maureen K. Ohlhausen, Michael O’Rielly, Christopher S. Yoo, Stephen F. Williams

All Faculty Scholarship

In today’s rapidly evolving telecommunications landscape, the development of new technologies and distribution platforms are driving innovation and growth at a breakneck speed across the Internet ecosystem. Broadband connectivity is increasingly important to our civil discourse, our economy, and our future. What is the proper role of government in facilitating robust investment and competition in this critical sector? When technology companies constantly have to reinvent themselves and adapt to survive – what role should government play? This panel of experts at the Federalist Society’s 2014 National Lawyers Convention discussed the current regulatory environment and how government policies – particularly regarding …

The Actavis Inference: Theory And Practice, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

All Faculty Scholarship

In FTC v. Actavis, Inc., the Supreme Court considered "reverse payment" settlements of patent infringement litigation. In such a settlement, a patentee pays the alleged infringer to settle, and the alleged infringer agrees not to enter the market for a period of time. The Court held that a reverse payment settlement violates antitrust law if the patentee is paying to avoid competition. The core insight of Actavis is the Actavis Inference: a large and otherwise unexplained payment, combined with delayed entry, supports a reasonable inference of harm to consumers from lessened competition.

This paper is an effort to assist courts …

Teece's Competing Through Innovation, Herbert J. Hovenkamp

All Faculty Scholarship

This essay reviews David J. Teece's book, Competing Through Innovation: Technological Strategies and Antitrust Policies (2013).

Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

All Faculty Scholarship

The Supreme Court’s opinion in Federal Trade Commission v. Actavis, Inc. provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. In our previous article, Activating Actavis, we identified and operationalized the essential features of the Court’s analysis. Our analysis has been challenged by four economists, who argue that our approach might condemn procompetitive settlements.

As we explain in this reply, such settlements are feasible, however, only under special circumstances. Moreover, even where feasible, the parties would not actually choose such a settlement in equilibrium. These considerations, and others discussed in the reply, serve to …

U.S. Vs. European Broadband Deployment: What Do The Data Say?, Christopher S. Yoo

All Faculty Scholarship

As the Internet becomes more important to the everyday lives of people around the world, commentators have tried to identify the best policies increasing the deployment and adoption of high-speed broadband technologies. Some claim that the European model of service-based competition, induced by telephone-style regulation, has outperformed the facilities-based competition underlying the US approach to promoting broadband deployment. The mapping studies conducted by the US and the EU for 2011 and 2012 reveal that the US led the EU in many broadband metrics.

• High-Speed Access: A far greater percentage of US households had access to Next Generation Access (NGA) …

Tesla And The Car Dealers' Lobby, Daniel A. Crane

Articles

Tesla Motors, the offspring of entrepreneur Elon Musk (who brought us Pay-Pal and SpaceX), is the most exciting automotive development in many decades and a marquee story of American technological dynamism and innovation. The company’s luxury electric cars have caused a sensation in the auto industry, including a review by Consumer Reports calling Tesla’s Model S the best car it ever tested. Despite the acclaim, Tesla faces enormous challenges Despite the acclaim, Tesla faces enormous challenges in penetrating an automotive market that has been dominated for a century by internal combustion engines. Not only must it build cars that customers …

Innovation And Optimal Punishment, With Antitrust Applications, Keith N. Hylton, Haizhen Lin

Faculty Scholarship

This article modifies the optimal punishment analysis by incorporating investment incentives with external benefits. In the models examined, the recommendation that the optimal penalty should internalize the marginal social harm is no longer valid. We focus on antitrust applications. In light of the benefits from innovation, the optimal policy will punish monopolizing firms more leniently than suggested in the standard static model. It may be optimal not to punish the monopolizing firm at all, or to reward the firm rather than punish it. We examine the precise balance between penalty and reward in the optimal punishment scheme.

Toward A Closer Integration Of Law And Computer Science, Christopher S. Yoo

All Faculty Scholarship

Legal issues increasingly arise in increasingly complex technological contexts. Prominent recent examples include the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA), network neutrality, the increasing availability of location information, and the NSA’s surveillance program. Other emerging issues include data privacy, online video distribution, patent policy, and spectrum policy. In short, the rapid rate of technological change has increasingly shown that law and engineering can no longer remain compartmentalized into separate spheres. The logical response would be to embed the interaction between law and policy deeper into the fabric of both fields. An essential step would …

Competition For Innovation, Herbert J. Hovenkamp

All Faculty Scholarship

Both antitrust and IP law are limited and imperfect instruments for regulating innovation. The problems include high information costs and lack of sufficient knowledge, special interest capture, and the jury trial system, to name a few. More fundamentally, antitrust law and intellectual property law have looked at markets in very different ways. Further, over the last three decades antitrust law has undergone a reformation process that has made it extremely self conscious about its goals. While the need for such reform is at least as apparent in patent and copyright law, very little true reform has actually occurred.

Antitrust has …

Activating Actavis, Aaron Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

All Faculty Scholarship

In Federal Trade Commission v. Actavis, Inc., the Supreme Court provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. The Court came down strongly in favor of an antitrust solution to the problem, concluding that “an antitrust action is likely to prove more feasible administratively than the Eleventh Circuit believed.” At the same time, Justice Breyer’s majority opinion acknowledged that the Court did not answer every relevant question. The opinion closed by “leav[ing] to the lower courts the structuring of the present rule-of-reason antitrust litigation.”

This article is an effort to help courts and …

Institutional Advantage In Competition And Innovation Policy, Herbert J. Hovenkamp

All Faculty Scholarship

In the United States responsibility for innovation policy and competition policy are assigned to different agencies with different authority. The principal institutional enforcers of patent policy are the United States Patent and Trademark Office (USPTO), the International Trade Commission (ITC), and the federal district courts as overseen by the United States Court of Appeals for the Federal Circuit, and ultimately the Supreme Court. While competition policy is not an explicit part of patent policy, competition issues arise frequently, even when they are not seen as such.

Since early in the twentieth century antitrust courts have had to confront practices that …

Harm To Competition Or Innovation, Herbert J. Hovenkamp

All Faculty Scholarship

This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Innovation And Competition Policy, Chapter 6 (2d Ed): Restraints On Innovation, Herbert J. Hovenkamp

All Faculty Scholarship

This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Section 5 And The Innovation Curve, Daniel A. Crane

Book Chapters

the ftc’s authority to use Section 5 of the FTC Act to reach anticompetitive conduct that would not be illegal under the Sherman or Clayton Acts has been much discussed in recent years, particularly in conjunction with the FTC’s enforcement action against Intel. As of this writing, a Section 5 action against Google seems imminent.