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Michael Waldman (Cornell) presented a provocative seminar today at Melbourne Business School on copyright extensions and their social value. You can access the paper here. The paper related to the optimal length of copyright protection and the main idea was that copyrighted material could be subject to continual on-going investment (to maintain freshness and relevance) and so longer copyright length could encourage that in a socially useful way. Read more

FYI, a new post on Game Theorist this weekend on “allergies and responsibility.” I apply the Coase Theorem to the problem of how to manage children with nut allergies.

Marginal Revolution reports on one way firms sort their customers out. Read more

In Slate, Joel Waldfogel describes a study on the impact of family succession in firms. It is bad, by the way. Here is the final paragraph of the Slate piece:

Like all studies, this one has limits—chiefly that it is limited to Danish firms. But we are left with the conclusion that showing favor to family members in the executive suite isn’t bad just for other CEO candidates. It’s bad for firms’ performance as well. To paraphrase the Bard, something nepotistic is rotten in the state of Denmark. [emphasis added]

I am left wondering whether this qualification would have been stated had the data been from the US or even from a US state. I have never seen that type of qualification but routinely see it for anywhere else.

At the ACCC Regulatory Conference, I commented on a paper by Jerry Hausman (MIT) who talked about US experience in regulating telecommunications and saw that experience as largely negative. He also argued that it was now unnecessary given competition from cable. So he asked “why not force Telstra to spin off its share in Foxtel and its cable network?” Read more

At the ACCC conference, George Yarrow (Oxford) was discussing the new European competition law framework. Under Article 82, firms can apply for exemptions from anti-trust problems for certain actions so long as they don’t constitute an abuse of monopoly power. In describing this article, Yarrow appealed to a message from Spiderman 2 where Uncle Ben advises the young Spiderman how to handle his powers with the addage: “With great power comes great responsibility.” According to Yarrow, that pretty much describes article 82. I look forward to the screening of the DVD in the first law case on the issue in Europe. Perhaps Microsoft will do it using Windows Media Player!

I am currently at an ACCC conference on the Gold Coast. While there is a water crisis here, the hotel I am staying at does something common to all hotels these days; it asks you to think about whether you want your towels and sheets changed everyday. Here is the plea on a little card:

We care about the environment. We are committed to undertaking practices that preserve our natural resources … Working together, we can conserve millions of litres of water, save energy and minimize the release of detergents into the environment.

Now a colleague who was on a tad on the political right objected to this imposition by the hotel pandering to the ‘greenies.’ He indicated that he would prefer to stay in a hotel without such policies. I think he is a moron. Let me explain why. 

Here is how I read the hotel card:

We care about our shareholders. We are committed to undertaking practices that contain our costs … Working together, we can conserve millions of dollars of costs, save energy and minimize the release of funds to laundries and detergent manufacturers.

I love this policy. It is clearerly profit maximising and at the same time can be pitched to customers as something socially responsible. If you want to be socially responsible, you are. But if you don’t — like our anti-environmentalist friend — you also win. By saving costs, competing hotels pass on the savings to their customers in the form of lower room charges. If you still choose to have your towels changed everyday you can but you still get the benefit of sharing in the cost savings from the greener customers. If there was a hotel that didn’t have such a policy and you went to it, you would pay more and still have clean towels. Hence, you would be a moron.

The reason for this wonderful win-win is that you can also read the card this way:

We care about resources. We are committed to undertaking practices that preserve our resources … Working together we can save millions of litres of water, detergent and towel washes, save energy and minimize the use of a service some people don’t value.

The point is that hotels found a way not to bundle into their product something that many people didn’t value — daily towel and sheet changing. Why did they know this? Because those same people don’t practice this in their own homes. And for the most part they are not thinking of the environment but the actual resource costs of washing. Regardless of whether they are in their own home or a customer of a hotel, that lack of value persists. Hotels have found a way to unbundle that part and they do not even have to go through the difficulty of charging for the service. Very easy.

[Book Review] I have just finished reading Tom Standage’s latest book, A History of the World in 6 Glasses. Standage likes to put historical events through a neat and interesting lense. I enjoyed his previous works including The Victorian Internet, The Turk and the wonderful, The Neptune File. 6 Glasses was a little more cute than these other works. Basically, it looked at how major forces in the world: urbanisation, empire, colonisation, globalisation and industrialisation were associated with six key classes of drink: beer, wine, spirits, coffee, tea and Coca-Cola. You learn about the drinks and their origins and you learn about political economy in relation to them. A good, light read. There is even a discussion of water in a final chapter but milk and juice are not mentioned. Read more

The Chronicle of Higher Education has a symposium today on whether blogging harms academic careers. (It is subscription based but here is a link to some content). Not surprisingly, academics everywhere are blogging about this.

It seems to me extraordinary that blogging could directly harm an academic career: that is, appointments and promotions amongst equivalent people would be decided upon whether they kept a blog or not. But then again, in times old, good student evaluations were said to create the same negative signal.

However, there is the indirect effect in terms of time spent. For those who don’t blog, it seems like blogging would take lots of time. Indeed, that is one of the reasons why those who don’t blog, don’t. But I have talked with many who do. Like myself they spend very little time writing their blogs (maybe 20-30 minutes a day tops). They spend more time reading them but so does everyone else it seems. So in terms of indirect effect, selection weeds out those for whom the indirect effect of blogging is minimal. That means that it should hardly be construed as some negative signal of untapped potential.

Here is a report from today’s Age:

PETER Costello has warned Australians to breed more or run the risk of a population transformed by immigration.

It is difficult to see how this suggestion coming from a high level Minister is anything other than outrageous. What is more is that we are spending almost $1 billion a year of taxpayers money in support of this notion. There is no level on which this type of idea isn’t horrifically wrong.

In an otherwise interesting article on CNET, commentators suggest that trolls (see my earlier posts) seeking to buy and then sell patents on speculation will have a tough job because valuing these patents is difficult. I only want to point out here that valuation is a tough job for speculators and innovators alike. The residual uncertainty is a reason we see brokers not a reason they will fail.

Here is one for the “this is different” category. A group of Yale researchers have taken behavioural economics to a new level. Instead of using human subjects (who tend to be expensive and complicated) they have decided to test economic behavour using Capunchin monkeys. And not just rational behaviour but market behaviour of the sort that humans do. Read more

The Productivity Commission are conducted a study into Public Support for Science and Innovation. Yesterday I put forward a submission (click here to view it). Read more

Sometimes you read a story in The Onion designed to be its usual ludicrous self and you think: maybe that isn’t such a bad idea. Today’s headline story is: “Scratch N’ Win Ballots to Debut in November.” Now as I waited through the ad (rather than skipping it) I though, oh this is a way to get voter participation up. Give people another reason to go to the polls and all that. A sort of ‘gift.’ Not bad.

Well, sort of, but on a scale I didn’t imagine. The idea is that the scratch and win was your ballot and you got to find out how many votes you got. So while most would get one vote lucky winners would get 10,000 or more. For those folks, their preferences would have a much bigger impact on the election. There was also some notion that you could distribute these amongst the various ballots at the same time to optimise your impact. Read more

On occasion, I like to take things from my shelf, open them up and see what I find. I did this last month. For this month, I picked up the May 1998 issue of the Quarterly Journal of Economics and flipped open to page 380. Read on, this is a good one … Read more

Hot on the heals of news that the Daily Show with Jon Stewart is showing nightly on Foxtel, the Global Edition will be shown on Thursdays at 10pm on SBS. This version is a sort of ‘best of’ of the week but will do for those Australians who don’t have other alternatives.

Sadly, the Foxtel option edits the show to miss the last few minutes segway into The Colbert Report. Hopefully, that will come soon. For the moment, we will have to make do with that online.

News reports today that emergency call operators are receiving incentives to cut call times. Clearly, the shorter the calls are, the more quickly the aggregate calls can be handled. The problem is that pushes to improve quantity invariably hit quality and that is what gets the headlines. Read more

Contrary to expectations, NBC’s free internet viewing of episodes of The Office (prior to broadcast) can be viewed from outside the US. Click here for the first installment. It seems like the plan is to have serialised content at 5 minute clips once each week. Perfect for office viewing.

I often walk past a car with Flocarshare emblazened on it. It is just down Leicester Street where MBS is located. Finally, I logged onto their website and found out what it was all about. Basically, it is entrepreneurial socialism. Read more

Lots of people are having trouble understanding the network neutrality debate. I made my own attempt some time ago (click here). Here is the attempt from the actual regulators … click here.

Tim Harford writes about the difficulties in suppressing markets, in this case, for unhealthy food sold at schools:

These days schools are trying to outlaw the unhealthy options, but some markets are irrepressible. William Guntrip is a 13-year-old boy whose Northamptonshire school banished vending machines and tuck shop food in favour of nutritious offerings at the canteen. Guntrip spotted a market opportunity and has been buying soft drinks and sweets and reselling them in his school playground. The school is trying to stop him and claims that most students are happy with the new regime, although if that was true then Guntrip wouldn’t be making ₤50 a day.

High prices, entrepreneurship and mathematics. Sounds like a win-win.

FYI: there is a new post on Game Theorist this weekend observing my children play a new game of Meta-Chess.

It has taken me far too long to get around to reading Imagining Australia: Ideas for Our Future by MacGregor Duncan, David Madden, Peter Tynan and my ‘usual days’ co-author Andrew Leigh. The book is a structured collection of ideas regarding how to improve Australia as a nation in all of its facets. It is all pretty much emminently sensible but also with lots of nice, new specific recommendations that make you wonder why our politicians spend most of their time on poor, old specific recommendations such as baby bonuses.

But the bit I want to comment on is in my own area: innovation. Read more

In an earlier post, I noted that there was a missing market for advertisements. To get people to watch ads, we bundle ads with other things that grab their attention including television, radio but interestingly, not books. Television broadcasters are doing interesting things to get people to watch ads. Now, internet search engines are getting in on the act. Read more

The Weekend Australian conducted an interesting experiment. It sent out a sample chapter from Nobel prize winner, Patrick White’s novel The Eye of the Storm; changing only character names. All of the Australian publishers it was sent to rejected. The interesting thing about all this is not the rejections themselves (the sample chapter may have been chosen strategically) but how impolite some of them were. For example: Read more

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