I take it you are not happy with the shift from the “per se” standard in Miles to the “rule of reason” standard in Leegin.

Mr RTS,

Firstly, I’d like to apologize to Mike for saying he was “probably not an economist”. The reason I said so was because he did not seem to be showing us the other side of the argument, the “on the other hand” most economists do by training. Nevertheless, the comment was not needed either way – all I needed to do was point out that I was disappointed that Mike was not showing us arguments for the other side.

Secondly, on your “this joker is trying to say that your position has no economic basis.” I was not. For example, I currently tentatively support the position against IP rights when it comes to music, but I need more arguments/ evidence before I could conclusively come to view. I currently believe that the efficiency benefit of zero-priced reproduction of music MAY outweigh the loss we would face if musicians thereby make less money and produce less music. So, I was not saying that Mike’s (general) position has no economic basis.

However, the claim that IP rights are never beneficial does not have any economic basis, in my opinion. Its just absurd. Are their really papers that argue so categorically? From some of the other posts, I understand that such categorical/ absolutist positions are rarely to be found in the literature, it at all (but please forward them, if they exist). In my opinion, there is good evidence – and really, simple common sense – that there are often important economic payoffs in allowing inventors to benefit from their invention through IP.

It is only, however, the ABSOLUTIST position of Techdirt, that upsets me. Its always the same one sided view. Dont get me wrong, I think Techdirt does a good job sometimes and that is why I read them. However, if we don’t engage in the arguments of the other side, we wont succeed in knocking IP where it counts.

Finally, on the comment that I should be treated like a “snake oil salesman” trying to protect the big powers. That’s just blatantly nasty. I don’t appreciate it. I may have been a little nasty in saying Mike was probably not an economist. And for that, perhaps I have received due retribution.

However, as to your implication! As to any implication that my views are biased, or ever would be, well…sorry, I’m going to have to take you on.

Not only are my views based on serious research, I was also careful to state them in non-absolute terms. For example:

E.g 1: “Actually, there are OFTEN very good economic reasons to limit who can sell your product.” OFTEN, but not always are not even most times. Just OFTEN.

E.G 2: “Previously, under anti-trust law (specifically, Dr Miles Ruling), these strategies were banned (e.g resale price maintenance and exclusive dealing) but it has been overwhelmingly shown that SOMETIMES these strategies have net positive welfare effect (for consumers, resellers and manufactures).” SOMETIMES, but not always. And not even most times.

Hence, the idea that I am trying to back the “powers that be” who are trying to maintain rents in distribution is just utter rubbish. Your admit that there is plenty of economic research arguing that RPM can sometimes be a good thing. Yet you think the work of all these economists in all these universities are biased. OK. Thanks for your conspiracy theory.

Who cares. Academic research is powerful precisely because we subject the research to scrutiny. The economic arguments which suggests there are efficiencies inherent in price maintenance (RPM) have been published in peer reviewed economic journals. Not only that, but they have been accepted as SO CONVINCING by the Supreme Court of Appeals (in Leegin) that they were in part relied upon to overturn nearly a century of per se prohibition on RPM.

Perhaps you will consider the core logic of the argument of men you insult so quickly. The fact is that manufacturers have no obvious incentive to give retailers/ resellers/ distributors additional profit (by implementing RPM). They can get all the profit they need by simply charging the retailer/reseller/distributor a higher price. If they try maintain the price that these resellers charge, it will usually only hurt them BECAUSE it will cause the final retail price to go up, the demand for the goods to drop, with no benefit of the higher price (which goes to the reseller, not the manufacturer). HENCE – we would in general expect that – just like consumers – manufacturers want to keep the profits and prices of resellers as low as possible.

OK, so when they nevertheless DO CHOOSE to implement RPM, there may be a very good reason for it. For example, they may be doing it because they believe that ultimately that is the best way to sell their product. The examples I gave are just one of the many instances as to how this may be the case (i.e. maintain service levels). There are many others, including maintaining a wide distribution service.

So, in my mind, the onus is you to show that the manufacturer has got it wrong OR, as is the core danger in RPM, they have been “bought out” by the distributors/resellers/retailers who are using them to maintain a price cartel. But absent evidence like this, we should be very careful to go about telling manufacturers how they should sell their products. That is why Leegin REMOVED the PER SE condemnation of RPM. Its not that RPM is always good. Its just that it may not always be bad. And the onus is on us, case-by-case, to find out whether the particular instance under discussion harms or benefits the economy. Idealistic positions are dangerous in economic arguments. And they are not needed.

Techdirt should realise this and engage more with the other side – in that way, their good arguments would carry more weight, especially when IP should go, and we want to do more than preach to the already converted.

Otherwise, you look like you are trying to support a new brand of resellers: the Internet companies that stand to benefit if IP is scrapped. And then you want to apply it to all sorts of other things – RPM, etc, etc. And that seems like a dangerous slope to slide down and makes me wonder who is selling the oil.

Property rights are hard won institutions of peace, liberty and justice. We could make manufacturers give up their factories because we know they are charging us above variable cost for the cars they produce but we don’t do that because, well, thats communism. And communism sucks. Non tangible property is no different (other than that the variable cost will sometimes be zero). We don’t usurp IP because to do so might stifle innovation and investment. However, we do decide how much to protect them, as with other property rights. Sometimes a little, sometimes a lot. In some cases, we may protect too much. Music, for example. But I’d like to read something that probably engages in the argument.

R. Lipschitz.