The University of Chicago Law School Faculty Blog

The Obama Lottery

The Obama Campaign has a new and clever offer to encourage donations. The candidate promises to sit down for a "relaxing" dinner with four ordinary Americans/donors in order hear their views and concerns. We are all now encouraged to send a contribution before a given deadline in order to get a chance to be invited to the next intimate dinner with the candidate. The lucky winners will have their trips and meals paid for by the Campaign. The advertisement, if that is the right word, is careful not to say this is a lottery. I do not mean to turn this blog post into a campaign site, especially because we at Chicago take (justifiable) pride in Senator Obama, and also because to link here to the site, might violate some campaign finance rule, but you can see the offer for yourself by Googling the candidate's name and "dinner" or by navigating through the campaign website.

Epstein CBI: Intuition, Custom and Protocol

It's been a while since we brought you a podcast, so here goes. On Tuesday, April 10, 2007, Richard Epstein, James Parker Hall Distinguished Service Professor of Law, delivered a Chicago's Best Ideas talk entitled "The Blink of an Eye: Intuition, Custom and Protocol." Several of our faculty members, including Dean Levmore, have been doing a lot of work on how information is people use the information they get to make decisions. Richard Epstein's take on the subject is, as always, worth your time. Listen to the talk here, and review the blurb from the posters after the jump.

Should China (and the U.S.) Be Paid To Abate Greenhouse Gas Emissions?

Suppose that a country, Y, is threatened by a natural phenomenon, such as flooding.  Y lacks the technological know-how to build sea walls, so it pays another country, Z, to build the sea walls for it.  We would not normally criticize Z for charging Y to build the sea walls, even if Y is a poor country.

Now imagine that Y and Z share the coastline.  The expected flooding imposes different costs on both countries: $90 million for Y, and $10 million for Z.  And imagine that a single flood warning system would be the most efficient way to minimize these costs.  A high-quality system would eliminate all of the losses but would cost $30 million.  A low-quality system would halve the losses but cost only $2 million.  Which system should be built?

The Google Spectrum Gambit

Things have turned quite interesting in the upcoming Federal Communications Commission auction of new spectrum. Google announced today that it was willing to bid at least $4.6 billion in the upcoming 700 MHz auction, so long as the spectrum was sold subject to four open platform requirements. At first glance, that must seem odd: why does Google want restrictions imposed that it could simply implement as the auction winner? The point of course is that Google wants these requirements imposed on any winner, not just itself. Google might be happy to go into the spectrum business but it clearly believes that it benefits if open-platform spectrum is created. Google has effectively offered the FCC a price floor for the spectrum, so long as it gets the rules that it wants. What should the FCC do?

Adding the open-platform requirements will almost certainly reduce the revenues that the FCC will collect in the auction. Many of the incumbents may be discouraged from bidding under the open-platform requirements. But revenue maximization shouldn’t be the government’s chief concern: the government should be in the social welfare business and it should be willing to accept reduced revenue if it can buy enough telcom competition.

(Virginia's Driver Responsibility) Fines and Taxes

Recent news has focused attention on a Virginia law, effective July 1, that dramatically raises fines for reckless driving, including a speeding violation at more than 15 miles per hour above the speed limit. The legislative history and statutory language makes clear that the fines are a revenue-raising measure, and they therefore raise the interesting question of whether we need to separate taxes from penaltiies, or even deterrence. (I will ignore here the interesting point that the legislation was introduced by a legislator whose law firm specializes in traffic law and will therefore see much more business in defending drivers who have more reason to dispute citations.) As if to confirm the revenue-raising goal, the fines are earmarked for transportation projects, and are to be applied only to Virginia residents on Virginia roads. At least four other states have "driver responsibility laws" that apply to out-of-staters as well as residents. I don't think this last provision was necessary for constitutionality, but let us just accept the resident/nonresident distinction as aiming to avoid claims of discriminatory enforcement against out of state residents. I return to the limitation to Virginia residents below.

Blockbuster Exclusives, the First-Sale Doctrine and Competition over Content

I was in a Blockbuster video store this morning for the first time in a very long time. In my house, I run our Netflix queue, while my wife makes the rare foray to Blockbuster—usually for something kiddish. But I did the return this morning and actually went in to look around. What caught my eye immediately are the new Blockbuster exclusives that it is pushing heavily in its stores. A quick online tour makes clear—sort of—what is going on.

Book Review: Evans, Hagiu & Schmalensee, Invisible Engines: How Software Platforms Drive Innovation and Transform Industries.

What makes the PlayStation 3 tick? The Apple iPod? Your BlackBerry? Software, or, more precisely—and much more interestingly—a software platform makes the hardware sing and sits in the middle of a business ecosystem of users, hardware makers and software developers. An invisible engine.

David S. Evans, Andrei Hagiu and Richard Schmalensee hold a mix—individually and collectively—of high-end academic and consulting positions. They are nicely-situated to bring to bear sophisticated theory—here, the rapidly developing economics of multi-sided markets—and a substantial amount of real-world contact. They do exactly that in their new book Invisible Engines: How Software Platforms Drive Innovation and Transform Industries.

The Supreme Court: What Conventional Wisdom Misses

According to conventional wisdom, the Supreme Court is equally divided between a conservative wing and a liberal one, with Justice Anthony Kennedy acting as the swing voter. But there is something extremely strange about this view of the current situation. By the standards of the recent past, the liberal wing isn't liberal at all.

According to conventional wisdom, the Court has long been evenly balanced between left and right, and it has finally shifted a bit to the right under Chief Justice John Roberts. But there is something strange about this view as well. The Court shifted quite dramatically to the right between 1972 and 2000, indeed between 1980 and 2000, and yet people continued to speak of an alleged "balance" even as the dramatic shift was underway.

Remixing European Film

Here is a twofer: an interesting example of remixing preexisting works plus a window into content cultural differences between the United States and Europe.

The European Commission’s MEDIA website is currently promoting its efforts in supporting film in Europe with four compiled video clips showing different emotions. Clips capture joy, love and sadness, but it is the fourth clip that is getting the blogging attention (you can watch a version of it at the European Commission site or at YouTube).

On the cultural differences, note the extensive financing of film by the European Union plus note that the fourth clip is NOSFWUS (not obviously safe for work in the United States). (Hat tip: Internet Ronin via Althouse.)

Why Do They Poke Me in the Eye?

This is one of a series of posts; the last post was here.

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The new tools of creation and distribution make this the best time ever for those willing to give away their content. But professional content creators have never faced a greater challenge. Part of this is greater competition from the newly empowered amateurs, the new content professionals of the Internet era. Competition is healthy, and especially so given the poor track records of the gatekeepers in choosing content. The “failure” rate on professionally chosen music is extraordinarily high. But I suspect that most of the professionals believe, rightly or wrongly I do not know, that their content will win in the marketplace against the amateurs.

Instead, the greater challenge to professionals is the collapse of the copy and the ability of content users to unbundle content and ads. If content creators cannot control copies or cannot ensure that ads remain attached to content, how will content creators get paid? Content producers have looked to technology to bolster the copy as copy and to limit whether users can unbundle ads and content. It is important to see the systematic challenge posed.