Tyler Cowen: evaluation

Transcript context

…Yes. I think that’s worth exploring if the quantitative magnitudes probably matter. Maybe the monopolist’s monopoly is so strong that he overshoots in terms of internalizing the kind of Pigouvian tax that you’d want to slap onto the market price in a competitive environment. It might be the monopolist is too much of a monopolist, but at least it’s worth thinking about. Better than relying on monopoly would be having a government that could estimate what the right non-priced external cost of the use of the fuel is, and then slap that tax on, but that’s a political impossibility. Sure. Governments very often subsidize, say, fossil fuels more than they tax them. Now, here’s an, I think, 1979 release from Glenn Loury. Are large or small firms better at innovation? What do you think these days? [laughs] I think that that was a nice little paper in the QJE circa 1979. I was proud of it. I took this problem that guys like Mike Sherer, the distinguished IO [input-output] guy at that time, or Mort Kamien or other people had been worrying about market structure and innovation — what’s the relationship between the two? I had a nice little stick-figured model where I could analyze that issue. But I never got beyond an industry with identical firms, and they were either n of them or n+1 one of them, and that was my parametrization of competition: more firms, more competition. I didn’t get at all into real industrial organization, which would have to do with oligopoly and a size distribution of firms in the industry and so on. I’m trying to remember [laughs] what I had to say about the relationship between a number of firms and the rate of innovation. I think the rate of innovation is increasing in the number of firms, but I think that’s what I found, but [laughs] it’s a long time ago, Tyler.…

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