Category Archives: Competition

The Apple E-Book Ruling and Antitrust Absurdity

A recent ruling against Apple over its e-book pricing policies highlights the absurdity of antitrust laws, as I point out in the Daily Caller:

Under American anti-trust laws, there are three things no business should ever do. They are as follows: Charge higher prices than your competitors, charge lower prices than your competitors, and charge the same price as your competitors.

Higher prices mean that you have market power, and you are abusing it. Lower prices mean that you are trying to unfairly undercut your competition. And if you charge the same price as your competitors, that means you are colluding with them (although in economics, it can also be evidence of near-perfect competition).

It goes downhill from there. Read the whole thing here.
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CEI Podcast for December 12, 2012: Ending the Beer Monopoly

beer
Have a listen here.

Fellow in Consumer policy Studies Michelle Minton argues that the beer industry in America is essentially a monopoly. In her new paper “Avoid a Monopoly by Setting the Market Free: How the Mandatory Three-Tier Distribution System Inhibits Competition,” she argues that this monopoly is a regulatory creation, and offers ideas for reform.

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.