Category Archives: Competition

CEI Podcast for November 1, 2012: Is Google’s Search Dominance Permanent?

Have a listen here.

Associate Director of Technology Studies Ryan Radia argues that Google’s current dominance as an Internet search engine service is a fragile thing. Creative destruction is everywhere, and its onset cannot be predicted. As soon as something better comes out, consumers will flock to it in droves. Calls for antitrust enforcement should not be answered.


CEI Podcast for July 12, 2012: Who to Blame for DC’s Power Outage

Have a listen here.

The Washington, D.C. area was recently hit by a rare derecho storm, which is essentially a land hurricane. Three million people were left without power, some for more than a week — during a record-breaking heatwave. Pepco, the electric utility that serves D.C. and parts of Maryland, quickly drew the public’s ire. Energy Policy Analyst William Yeatman thinks the jeering public should look in the mirror. A government-granted monopoly and rampant NIMBY-ism are not a recipe for success.

Justice Department Should Drop Apple Lawsuit

The Justice Department sued Apple and five major publishers this morning over their e-book pricing policies. Under their current contracts, a book’s publisher sets the price, and Apple gets 30 percent of the revenues. DoJ believes this is collusion. In a CEI press release, Wayne Crews and I explain why the lawsuit is a mistake, and should be dropped. Here’s Wayne:

“The complaint against Apple seems to be that collusion and smoke-filled rooms paved the way to a deal by which Apple gets a 30 percent cut of the publishers’ e-books sold for Apple devices, while other vendors are forbidden from selling below that pre-specified price. Such ordinary business deals, you see, involve a now-disparaged free market instrument called a ‘contract.’

“This arrangement appears to have been a normal response to Amazon’s deep discounts of e-books below physical book prices. DoJ’s solution is presumably to stop free enterprise, and allow Amazon to dominate e-books? Now, thanks to DoJ getting involved, competitors need not respond to to Apple and the publishers to better serve consumers and shareholders.”

And here’s my take:

“Given Amazon’s much larger share of the e-book market, Apple is hardly in a position to price its products uncompetitively. If consumers feel overcharged, they can easily give their business to Amazon or Barnes & Noble instead – possibly by using Apple’s own products!

“Five years ago, the e-book market didn’t even exist. Now it has a variety of competitors, each of whom are trying out new, different, and evolving business models. Consumers are much better positioned to reward good pricing models and punish bad ones than are Justice Department attorneys.

“This lawsuit is further evidence of how poorly smokestack-era antitrust policies fit our information age economy. E-book manufacturers and publishers are trying and discarding different business models at a fast rate as they figure out what works and what doesn’t. By the time the wheels of justice slowly creak to a verdict, Apple, Penguin, Simon & Schuster, and the other defendants will have long since moved on to some other pricing policy. The Justice Department should admit its mistake and drop the lawsuit.”

Wayne also has more to say in his latest Forbes column.

Cronyism in America

Don Boudreaux, Susan Dudley, and Bradley Schiller make some good points:

-Companies spending lots of time and money in Washington begging for handouts is not capitalism.

-Stricter regulation isn’t the solution. Companies routinely rig regulations in their favor to hobble competitors. That isn’t capitalism, either.

If the embedded video below doesn’t work, click here.

Police Shut Down Renegade Lemonade Stand

Appleton, WI police taught some children a lesson about regulation’s true purpose by shutting down their lemonade and cookie stands. The children live about a block from an annual Old Car Show, and have been selling lemonade and cookies near the event for six years.

Vendors inside the car show didn’t appreciate the competition. So they talked the city government into passing a new ordinance that put the girls out of business.

After a round of bad publicity, city officials are thinking of re-writing the ordinance.

Proposed DC Taxi Regulations Would Harm Drivers, Customers

One of the best arguments for free markets is that bad things happen when businesses and government get together. As with church and state, it’s better to keep them separate. DC residents are finding that out for themselves, as this video about proposed taxi regulations shows.

Regulation of the Day 180: Braiding Hair

Businesses often use regulations as a cudgel to bludgeon their competitors. Occupational licensing is one of the most-abused types of regulation. John Stossel’s latest column shows how by telling the story of Jestina Clayton, an immigrant from Africa who braids hair for a living.

Her customers are satisfied. But now her competitors want her to take 2,000 hours of classes and spend thousands of dollars to get a cosmetology license. This even though braiding is the only service Jestina offers. And because the her competitors are the very people who grant or deny licenses, it will be easy for them to keep entrepreneurs like Jestina out of business even after she completes the licensing requirements.

Jestina’s story repeats itself every day in any number of occupations. Stossel writes:

Once upon a time, one in 20 workers needed government permission to work in their occupation. Today, it’s one in three. We lose some freedom every day.

“Occupational licensing laws fall hardest on minorities, on poor, on elderly workers who want to start a new career or change careers,” Avelar said. “(Licensing laws) just help entrenched businesses keep out competition.”

This is not what America was supposed to be.

He’s right.