Category: genres

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Efficiencies and Regulatory Shortcuts: How Should We Regulate Companies like Airbnb and Uber?

Edelman, Benjamin, and Damien Geradin. “Efficiencies and Regulatory Shortcuts: How Should We Regulate Companies like Airbnb and Uber?” Stanford Technology Law Review 19, no. 2 (2016): 293-328.

New software platforms use modern information technology, including full-featured web sites and mobile apps, to allow service providers and consumers to transact with relative ease and increased trust. These platforms provide notable benefits including reducing transaction costs, improving allocation of resources, and creating information and pricing efficiencies. Yet they also raise questions of regulation, including how regulation should adapt to new services and capabilities, and how to correct market failures that may arise. We explore these challenges and suggest an updated regulatory framework that is sufficiently flexible to allow software platforms to operate and deliver their benefits, while ensuring that service providers, users, and third parties are adequately protected from harm that may arise.

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The Design of Online Advertising Markets

Edelman, Benjamin. “The Design of Online Advertising Markets.” Chap. 15 in The Handbook of Market Design, edited by Nir Vulkan, Alvin E. Roth, and Zvika Neeman. Oxford University Press, 2013.

Because the market for online advertising is both new and fast-changing, participants experiment with all manner of variations. Should an advertiser’s payment reflect the number of times an ad was shown, the number of times it was clicked, the number of sales that resulted, or the dollar value of those sales? Should ads be text, images, video, or something else entirely? Should measurement be performed by an ad network, an advertiser, or some intermediary? Market participants have chosen all these options at various points, and prevailing views have changed repeatedly. Online advertising therefore presents a natural environment in which to evaluate alternatives for these and other design choices. In this piece, I review the basics of online advertising, then turn to design decisions as to ad pricing, measurement, incentives, and fraud.

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Mission Impossible? Yummy77 Delivers Groceries within the Hour (teaching materials)

Edelman, Benjamin. “Mission Impossible? Yummy77 Delivers Groceries within the Hour.” Harvard Business School Case 916-025, November 2015. (Revised June 2017.) (educator access at HBP. request a courtesy copy.)

Yummy77 considers alternative operational models to reduce cost, improve speed, and increase appeal. Can one of these approaches succeed where others have failed?

Supplement:

Mission Impossible? Yummy77 Delivers Groceries within the Hour – Powerpoint Supplement (HBP 916703)

Teaching Materials:

Mission Impossible? Yummy77 Delivers Groceries within the Hour – Teaching Plan (HBP 916051)

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The Online Ad Scams Every Marketer Should Watch Out For

The Online Ad Scams Every Marketer Should Watch Out For. HBR Online. October 13, 2015.

Imagine you run a retail store and hire a leafleteer to distribute handbills to attract new customers. You might assess her effectiveness by counting the number of customers who arrived carrying her handbill and, perhaps, presenting it for a discount. But suppose you realized the leafleteer was standing just outside your store’s front door, giving handbills to everyone on their way in. The measured “effectiveness” would be a ruse, merely counting customers who would have come in anyway. You’d be furious and would fire her in an instant. Fortunately, that wouldn’t actually be needed: anticipating being found out, few leafleteers would attempt such a scheme.

In online advertising, a variety of equally brazen ruses drain advertisers’ budgets — but usually it’s more difficult for advertisers to notice them. I’ve been writing about this problem since 2004, and doing my best to help advertisers avoid it.

In this piece for HBR Online, I survey these problems in a variety of types of online advertising — then try to offer solutions.

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Pricing and Efficiency in the Market for IP Addresses

Edelman, Benjamin, and Michael Schwarz. “Pricing and Efficiency in the Market for IP Addresses.” American Economic Journal: Microeconomics 7, no. 3 (August 2015): 1-23. (lead article.)

We consider market rules for transferring IP addresses, numeric identifiers required by all computers connected to the Internet. Transfers usefully move resources from lowest- to highest-valuation networks, but transfers tend to cause socially costly growth in the Internet’s routing table. We propose a market rule that avoids excessive trading and comes close to achieving social efficiency. We argue that this rule is feasible despite the limited powers of central authorities. We also offer a framework for reasoning about future prices of IP addresses and then explore the role of rentals in sharing information about the value of IP address and assuring allocative efficiency.

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Price Coherence and Excessive Intermediation

Edelman, Benjamin, and Julian Wright. “Price Coherence and Excessive Intermediation.” Quarterly Journal of Economics 130, no. 3 (August 2015): 1283-1328. (First circulated as Price Coherence and Adverse Intermediation in December 2013.)

Suppose an intermediary provides a benefit to buyers when they purchase from sellers using the intermediary’s technology. We develop a model to show that the intermediary would want to restrict sellers from charging buyers more for transactions it intermediates. With this restriction an intermediary can profitably raise demand for its services by eliminating any extra price buyers face for purchasing through the intermediary. We show that this leads to inflated retail prices, excessive adoption of the intermediaries’ services, over-investment in benefits to buyers, and a reduction in consumer surplus and sometimes welfare. Competition among intermediaries intensifies these problems by increasing the magnitude of their effects and broadening the circumstances in which they arise. We discuss applications to payment card systems, travel reservation systems, rebate services, and various other intermediaries.

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Does Google Leverage Market Power Through Tying and Bundling?

Edelman, Benjamin. “Does Google Leverage Market Power Through Tying and Bundling?” Journal of Competition Law & Economics 11, no. 2 (June 2015): 365-400.

I examine Google’s pattern and practice of tying to leverage its dominance into new sectors. In particular, I show how Google used these tactics to enter numerous markets, to compel usage of its services, and often to dominate competing offerings. I explore the technical and commercial implementations of these practices, then identify their effects on competition. I conclude that Google’s tying tactics are suspect under antitrust law.