Review of: Market power and regulation

Regulation of public services produced by monopolies or oligopolies in a way that balances production, innovation, and performance is a really, really hard problem. Jean Tirole has spent most of his academic career studying the ways these power relationships interact generally and then exploring specific industries to give actual advice.

Who: About Jean Tirole, French professor of economics who focuses on industrial organization and game theory.

What: A pop-sci introduction to the research that won the 2014 Nobel Prize in Economics

Where: Available on the RIT BizLeg website.

When: 2014

The Good

• The owner, foreman, worker example does a good job of clarifying the problem, which is quite abstract from a real world point of view.

• This bit about game theory seems to follow the trend we have been seeing in the legal documentation: “it depends.” Different markets behave differently and need to be analyzed individually.

• Software is one of the key markets that it uses as an example of monopolies taking over a supply chain by holding the keys to just one piece. This (to my FOSS tuned brain) points to the importance of having complete control of every level of your infrastructure. That means open all the way down to the OS and hardware level.

The Bad

• This needs some useful visualizations. I know, who doesn’t love a half page Monopoly man? But this is an example where all the illustrations have a very low ink to data ratio and this is document on a topic where that is not acceptable.

• I realize this was a pop-sci piece, but a little more detail into the actual work and some non-hypothetical examples would have been nice.

Questions

• So all this was being implemented sometime soon after I was born in 1993. Where exactly has this been successful? It sounds good, but the major problem with a micro-economic or game-theory outlook on problems that I’ve noticed is that they make too many simplifying assumptions to necessarily play out like it does in theories or models.

• A lot of this sounds like Tirole and his colleagues are hand exploring data from a number of industries and discussing results. Is this an efficient way to analyze fast moving, global, and diverse markets? Is it possible to develop a model that can automatically produce ‘good enough’ results?

• Why should we mix private contractors with public goods in the first place? It seems like that would simplify this interaction substantially.

Final Thoughts

Nice introduction to the work of an influential economist I had never heard of before, good use some real life examples, meaningful visualizations, and a little more game theory depth. But it’s just a 6-page pop-sci article, so that’s probably too much to expect.

Rating: 0.7