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UPDATES: What does Nobel scholar Tirole say about U.S. cable?

He's not 'anti-big business,' says Penn's Yoo

"U.S. consumers might be paying less than they are for cable and Internet access if regulators had followed the guidance of [this year's Nobel Prize for Economics winner] Jean Tirole in promoting industry competition," argues the Associated Press here. 

"He has given us an instruction manual for what tool to use in what market," Torstetin Persson of the Nobel prize committee said of Tirole, a French economist who studied at MIT. "Politicians would be stupid not to take his policy advice."

But they didn't, says a scholar AP talked to: "Joshua Gans, management professor at the University of Toronto, says U.S. regulators didn't follow Tirole's advice to require cable and phone companies to sell competitors access to 'the last mile' of cable connecting homes to telecommunications networks. Instead, giants such as Comcast and Time Warner now control the last mile."

That's why in America today, AP writes, "to reach a home, a potential competitor must pay to install its own cable. That limits competition and allows providers to charge more. As a result, Gans says, American consumers pay too much for cable TV and Internet access."

UPDATE1: I asked competition scholar Christopher S. Yoo of Penn Law School, who has testified on Comcast's behalf re its planned TimeWarner takeover and also cited Tirole's work in his own, if he sees Tirole as a critic of letting cable companies control that Last Mile to consumers' homes: and what Yoo thinks of that critique.

Yoo writes back: "I believe it is a misrepresentation of Tirole's work to say that it concludes that regulation of big business would necessarily lead to lower prices.

"Any attempt to characterize Tirole as being anti-big business is an oversimplification. Tirole is an economist's economist. As such, his work does not naturally lend itself to simple policy inferences. Instead, his conclusions tend to be carefully nuanced, identifying the circumstances under which regulatory intervention would make things better and those when it would make things worse.

"In fact, once you get past the more simplistic characterizations with which the article you sent me opens, the article more accurately acknowledges that 'Tirole cannot be easily categorized as pro- or anti-regulation.'"

UPDATE2: Gans acknowledges: "Tirole never offered direct advice on the U.S. He doesn't do that sort of thing; or at least he does it sparingly and very carefully.

"I was going on my reading of his body of work -- that I am very familiar with -- that showed access regulation of the sort we see outside the U.S. can promote competition and welfare -- so long as the pricing is right. So in a broad sense, it is my reading" of Tirole, that AP reported.

"So I don't disagree with Yoo here: my quote is clearly too extreme in its short form," Gans added.

"But what is true is that the rest of the world has followed a different path than the U.S. when it comes to regulation of the last mile. I know for a fact that Tirole's work was influential in showing how that could be done and informing that regulation. I think the results speak for themselves." Here's a Gans post on Tirole at the blog Digitopoly