Inframarginalism & Internet

An Online Conference on Markets as Wealth Distributors,
and the Implications for Tech Policy

February 18-19, 2021

Register to attend online here.


The price of the marginal unit of production determines whether a market is efficient. But the price of all the other units—the inframarginal units—determines who enjoys the wealth created by the market. A surge in scholarship on monopoly power, antitrust, and economic rents suggests that concerns about inequality are driving an inframarginal revolution in law and economics today, in which scholars are asking not just whether rules are efficient but also who they enrich.

At the same time, advances in Internet technology have given sellers greater capacity to redistribute wealth from buyers to themselves, by allowing sellers to use consumer data to target advertising, charge dynamic or personalized prices, and pursue other data-driven marketing practices. And the profitability of these technologies has drained resources from legacy institutions, particularly newspapers, that play an important role in democratic life.

The University of Kentucky Rosenberg College of Law, with support from John S. and James L. Knight Foundation, will convene an online conference on Thursday, February 18, and Friday, February 19, 2021 that will bring together lawyers and economists interested in advancing the wealth-distributive analysis of legal problems, and explore applications to current debates regarding tech law and policy. Ramsi Woodcock, Assistant Professor at the Rosenberg College of Law, is the conference organizer.

Registration is now open; please register here.


Conference Program

Day One Thursday, February 18, 2021

10:30 am–11:30 am
Thursday, February 18
(US eastern time)

Introduction: The Inframarginalist Lens

What does it mean to look at the law as a system of distribution of economic rents? A primer, with attention to unexplored applications in tech and elsewhere.

Speakers:

  • Ramsi Woodcock (Kentucky Law)
  • Michael Guttentag (Loyola Law L.A.)

11:30 am–11:45 am
Thursday, February 18
(US eastern time)

Break

11:45 am–12:00 pm
Thursday, February 18
(US eastern time)

Welcoming Remarks

Speakers:

  • Mary Davis (Dean, Kentucky Law)
  • Ramsi Woodcock (Kentucky Law)

12:00 pm1:30 pm
Thursday, February 18
(US eastern time)

Data & Power

At the heart of the information age lies the declining cost of communication, which has both expanded the economic pie and changed the way it is divided up, creating net winners and net losers. The amount a firm can extract from a customer is in part a function of the customer’s willingness to pay, and that makes the ability to know—and manipulate—one’s customer a key to rent extraction. In enabling the collection, analysis, and distribution of large amounts of data, low-cost communication has delivered that key to industry. Another key to rent extraction is being able to increase market prices, and low-cost communication is enabling that too, by giving firms better information about what their competitors are doing. How can changes to common law rules or the regulatory environment prevent industry from appropriating data-enabled rents? The low cost of communications also tends to favor centralization of communications networks, and centralized control in turn facilitates rent extraction. Can technologies like blockchain be used to capture the benefits of low-cost communications without the harms of centralization? Finally, low-cost does not mean no cost. Are those who cannot afford to buy into the information age by accessing the basic infrastructure required to get online more vulnerable to rent extraction than those who can get online, and, if so, what can be done further to lower the cost of communication and get them online?

Speakers:

  • Sam Weinstein (Cardozo Law)
  • Olivier Sylvain (Fordham Law)
  • Thibault Schrepel (Utrecht) — “Data Governance and Blockchain”
  • Daniel Greenwood (Hofstra Law) — “Self-Colonization in Personal Information Law”
  • Martina Ferracane (Max Weber Fellow at the European University Institute) — “Data Flows & Data Privacy: A Conceptual Framework to Assess Restrictions on Data Flows under GATS General Exceptions”

Moderator: Ramsi Woodcock (Kentucky Law)

1:30 pm–2:15 pm
Thursday, February 18
(US eastern time)

Break

2:15 pm3:45 pm
Thursday, February 18
(US eastern time)

The Meaning and Control of Bigness

The rise of the tech giants has brought the return of an old debate about firm size: whether size is efficient, whether it causes inequality, whether to regulate big firms or smash them, and whether the antitrust laws already resolve these questions by prohibiting size. What do we do about tech giants like Facebook, Google, Apple or Amazon that have hundreds of billions of dollars in assets? Is it necessary to show that they have behaved badly as a precondition for regulating them or breaking them up? And if so, have they behaved badly? Or is their size alone enough to warrant action, perhaps because size alone leads to regressive redistribution of wealth? And if that is the case, is antitrust the right tool for the job, or are there other ways of denying them the monopoly or Schumpeterian rents that they generate?  

  • Dina Waked (Sciences Po Law) — “Antitrust as Public Interest Law: Redistribution, Equity, and Social Justice”
  • Alec Stapp (Progressive Policy Institute) — “Defaults Aren’t Destiny: A Case Study Approach to Competition for Distribution in Digital Markets”
  • Chris Sagers (Cleveland-Marshall Law) — “United States v. Apple: Competition in America”
  • Nik Guggenberger (Yale Information Society Project) — “Essential Platforms”
  • Seth Benzell (Chapman Argyros) — “How to Govern Facebook” (with Avinash Collis)

Moderator: Nicolas Petit (European University Institute)

3:45 pm–4:30 pm
Thursday, February 18
(US eastern time)

Break

4:30 pm6:00 pm
Thursday, February 18
(US eastern time)

Rent Theoretic Perspectives on Property Law

The roots of rent theory lie in the analysis of the law of property. Henry George famously argued that land, as an essential input into all production, and a resource in limited supply, could give those who control it leverage to demand of society all of the economic surpluses that society produces. It follows that property law, which provides a government guarantee of control over land, determines who controls the fruits of all economic activity. For George, the obvious response for those interested in reducing inequality of wealth was a land tax that would extract the surpluses that otherwise would be captured by property owners. But rent theorists have long been interested in a more direct approach to depriving the property owner of his surpluses: altering property law itself to prevent the centralization of control over resources in the hands of the few. How can we reform the law of property, and property-adjacent regimes such as trusts & estates or spectrum licensing, to achieve a more equitable distribution of wealth? And should we? One reform approach that has been popular among distribution-minded scholars in the interval between the first efflorescence of interest in rent theory a century ago and today is the dream of the commons, in which the radical free entry into all markets made possible by the absence of property rights drives rents to zero, but non-property-based allocation schemes nevertheless prevent overexploitation of resources. Is such a commons-based approach already a complete solution to the problem of wealth distribution? Or do rent theoretic approaches to property lead to substantively different reforms? And what about information commons? Surely, the commons in information created by the Internet is a good thing, even without an allocation scheme designed to prevent over exploitation, for there can never be too much talk, or too much information. Or can there be?  

  • Anthony Lee Zhang (Chicago Booth) — “Depreciating Licenses” (with E. Glen Weyl)
  • Brian L. Frye (Kentucky Law) — “Toxic Public Goods”
  • Nate Ela (Cincinnati Law) — “Reclaiming the Commons”
  • Faisal Chaudhry (Dayton Law) — “Property as Rent”
  • Felix Chang (Cincinnati Law) — “What Kind of Inequality Should Inheritance Law Remediate?”
  • Zvikomborero Chadambuka (Turin PhD) — “Is Marginalist Private Property Regressive?”

Moderator:

6:00 pm–7:00 pm
Thursday, February 18
(US eastern time)

Reception

Day Two Friday, February 19, 2021

9:00 am10:30 am
Friday, February 19
(US eastern time)

Redistribution through Antitrust and Consumer Law

Despite having adopted a “consumer welfare standard” in the 1970s, U.S. antitrust has not only failed to achieve unification with the broader field of consumer law, either as a doctrinal or theoretical matter, but has remained worlds apart from consumer law in terms of culture, with efficiency-oriented scholars tending to go into antitrust and more distribution-oriented scholars tending to go into consumer law. The result is that US antitrust has largely failed to grasp the radical implications of its own consumer welfare standard for addressing problems of wealth inequality. A consumer welfare standard is in fact an explicitly redistributive standard, requiring antitrust enforcers to put the economic interests of consumers ahead of those of other groups, including producers. That in turn suggests that long-standing antitrust rules such as the rule that excessive pricing in itself is no antitrust violation conflict with the consumer welfare standard and may need to change. It also suggests that manipulative marketing strategies should trigger antitrust liability. At the same time, EU antitrust law, which in some respects is already more consumer oriented than US antitrust law (e.g., via the rule against excessive pricing), has resisted generalized adoption of a consumer welfare standard in part out of fear that it would weaken, not strengthen, antitrust, suggesting that in the EU as well the relationship between consumer law and antitrust is not well understood. What is the connection between consumer welfare and antitrust, and between both and the problem of inequality? Does antitrust’s consumer welfare standard require a reinterpretation of antitrust rules to achieve reductions in wealth inequality? And does consumer law’s focus on consumer welfare require the same for current rules of consumer law? Finally, what alternatives, if any, are there to standard economic concepts like “welfare” and “markets” that might enable a fuller understanding of the problem of wealth distribution?

  • Rory Van Loo (B.U. Law) — “Consumer Protection, Competition, and Distribution”
  • Vijay Raghavan (Brooklyn Law) — “Consumer Law’s Equity Gap”
  • Behrang Kianzad (Copenhagen) — “Excessive Pricing as Undue Wealth Transfer and the Role of Fairness”
  • Luke Herrine (Yale Law PhD) — “Theorizing Market Governance after Coordination Rights” (with Nathan Tankus)
  • Inge Graef (Tilburg) — “Consumer Sovereignty, Competition Law and Procompetitive Regulation: From Personalization to Diversity”

Moderator: Adrian Kunzler (Zurich)

10:30 am11:15 am
Friday, February 19
(US eastern time)

Break

11:15 am12:45 pm
Friday, February 19
(US eastern time)

Taxation and Tech

Taxation is an underexplored remedy for Big Tech and tech is an underexplored remedy for tax. Consider first concerns about Big Tech. Many tech firms barter with their customers, supplying services to customers in exchange for their data—or attention—instead of their cash. That has stymied antitrust, which has traditionally viewed monopoly power as the power profitably to increase a cash price. But tax knows barter, and can more clearly see the bartering of personal data for services as a regulable transaction. What is more, taxation would seem to address more directly than antitrust the root of concerns regarding Big Tech—concerns that Big Tech’s ability to extract rents contributes to inequality of wealth—while at the same avoiding the cost and inefficiencies associated with antitrust remedies like breakup. Or does it? And what do the first civilizations, which arose to govern networks in a barter economy, have to teach us about the answer to this question? On the other side of the ledger, tech is swiftly making possible modes of taxation that were once merely theoretical abstractions. It is a small step from a world in which private firms know everything about you and use that information to impose private taxes on your every purchase to a world in which the government knows enough about your every purchase to replace (or supplement) the income tax system with a personalized consumption tax system. But should we do it?  

  • Reuven Avi-Yonah (Michigan Law) — “A New Corporate Tax”
  • Zach Liscow (Yale Law)
  • John Newman (Miami Law) — “Regulating Attention Markets”
  • Manoj Viswanathan (Hastings Law) — “Implementing a (Modern) Progressive Consumption Tax”
  • Joseph Manning (Yale Classics & Yale Law)

Moderator: Daniel Crane (Michigan Law)

12:45 pm1:45 pm
Friday, February 19
(US eastern time)

Lunch

1:45 pm3:15 pm
Friday, February 19
(US eastern time)

Antitrust Futures

Antitrust has come under attack in recent years for being too weak and ineffective. What exactly ails antitrust, if anything? Have the courts so embraced a noninterventionist ideology that they no longer pay attention to economic experts, who are telling us that concentration is once again a problem? Have they lost sight of economics more generally, despite professing to be guided by economics? And is concentration really once again a problem? If it is, what connection might concentration have to the rising wealth inequality that is the principal economic problem of our age? If there is a connection, is antitrust capable of addressing it, not just in theory, but also as a practical matter? And, stepping back, we must also ask: What is driving the current resurgence in interest in antitrust? Is it legacy firms such as newspapers that have been disrupted by the Tech Giants? Is it broad-based public concern about inequality? Or something else? And has interest in the Tech Giants obscured more important antitrust targets, such as the telecoms? What does the future hold for antitrust? 

  • David J. Teece (Berkeley Haas) — “Nuances of Broad Spectrum Dynamic Competition: Analysis and Assessment”
  • Fiona Scott Morton (Yale SOM)
  • Thomas Philippon (NYU Stern) — “The Great Reversal”
  • A. Douglas Melamed (Stanford Law) — “The Uncertain Importance of Antitrust Economics”
  • Herbert Hovenkamp (Penn Law & Wharton) — “The Looming Crisis in Antitrust Economics”
  • Susan Crawford (Harvard Law) — “Inequality and Fiber”

Moderator: Ramsi Woodcock (Kentucky Law)

3:15 pm4:00 pm
Friday, February 19
(US eastern time)

Break

4:00 pm5:30 pm
Friday, February 19
(US eastern time)

A New Rent Theory?

A century ago economics was a progressive science, as concerned with the study of the distribution of wealth as with the study of efficiency in the allocation of resources. Lawyer-economists like Robert Hale crafted highly developed accounts—firmly grounded in the marginalist and neoclassical economic paradigms still current today—of how legal rules serve to distribute the surpluses created by economic transactions between buyers and sellers and in so doing to perpetuate inequality, sometimes without any efficiency gain. Contributors to this “rent theory” tended to think that the solution to inequality lay more in reform of the common law, price regulation, and taxation, and less in the antitrust laws. The work of these scholars was never discredited so much as it was forgotten as interest shifted away from wealth inequality to the problem of efficiency. The return of extreme inequality, and of new tech-driven modes of expanding inequality today has led to a resurgence of interest in the concept of economic surplus and its relation to legal rules. It has led, that is, to a new rent theory. How does the law today work to distribute surpluses between buyers and sellers? Is there a connection between legal rules and the broader problem of wealth inequality? How can the law be reformed to create markets that more equitably divide surpluses between buyers and sellers, rich and poor? Is law reform the best way to redistribute wealth? What role does tech, and the way the law has evolved to handle tech, play in the distribution of surpluses today?   

  • Katharina Pistor (Columbia Law) — “The Code of Capital”
  • Przemysław Pałka (Future Law Lab at Jagiellonian University, Cracow & Yale Information Society Project) — “Terms of Injustice: The Distribution of Risk and Wealth in Digital Capitalism”
  • Michael Guttentag (Loyola Law L.A.) — “Boilerplate and Inequality”
  • Gerrit De Geest (Wash. U. Law) — “Rents: How Marketing Causes Inequality”
  • Matthew Dimick (Buffalo Law) — “Intellectual Property and Income Inequality”

Moderator: Herbert Hovenkamp (Penn Law & Wharton)

5:30 pm–7:00 pm
Friday, February 19
(US eastern time)

Reception

The conference program is subject to change without notice.