A Fun Exercise on Tacit Collusion

I handed two students mock price displays ranging from $3.50 to $4.50 in $0.25 increments and asked them to pretend to be rival gas station proprietors.  We ran through about 20 iterations.  Each time one student priced first; the second responded; and the first could respond in turn.  They took turns going first (and thereby being the last to set a price for that iteration.)

The first time prices matched at about $4.00.  The second time the first mover (who is also the last mover) undercut.  The third time the other student, in this iteration the first mover, undercut back.  I may have polluted this as an experiment by explaining that this was precisely the definition of disciplining conduct.  Every time after that -- for 17 more iterations -- the prices ended up matching.  They were not always at the top price (I had one student who was an altruistic seller) but they most certainly were not competing prices down to $3.50, the lowest available.

There are surely flaws in this as an experiment, but as a class exercise before discussing Theater Enterprises and Twombly it was much fun.  (I forgot to trot out the example of abnormally slow packs in distance track races -- e.g., the 5000 at the 1972 Olympics -- as another example of the same thing.)

It's the Economy Stupid . . .

Well, the Dow is back up over 14,000.  There are a bunch of megadeals, including megamergers in the pipeline.  Bernanke is reiterating his commitment to quantitative easing.  Meanwhile, the sequester looms, and Europe is uneasy.  So, the question I pose for the group is, what does this mean for law schools.  For the last couple of years there has been persistent moaning about how the legal market has fundamentally changed, that the entry level market is going to remain eternally depressed, that law school is a bad economic bet, and so on.

I'd like to put aside the conversation about the intrinsic value of a legal education for a moment, other than to assert that (1) law school is valuable; and (2) there are lots of things that law schools could do to make it more useful and more valuable, virtually none of which are being fruitfully discussed at the moment, at least in the blogosphere.

Instead, I'd like to ask whether we are nearing the end of the winter of our discontents.  Law school applications lag the economy.  Once a recovery is established, it starts to show up as deals (see above).  The firms then get busy, absorb internal slack capacity, and only then do they go to the market for new folks.  I have to believe that the combination of low interest rates, money sitting on the sidelines, and increasing deal volume is beginning to show up in the firms.  I'm beginning to get inquiries from lawyers I know about the existence of fourth year associates who are, "ready to make a move?"  That seems like a first sign.  It's also a symptom.  There, are, of course, no third and fourth year associates to be had, because four years ago firms were not hiring anybody.  Hopefully this will be good news for the underemployed lawyers who are still out there.  I suspect, for a variety of reasons, it's not.

On the other hand, I do think this is good news for current third year law students who are on the market now, and who will be on the market in the Fall.  I think it's great news for current first and second year law students, who will be applying for jobs in the Fall.

This, of course, won't show up as law school applications this year, or probably even next.  The word won't filter out to the marketplace that law students are getting good jobs again until about two years from now . . .  And, since law school is a four year bet, from application to graduation, who knows what things will look like in 2018?

Online Ed

I am intent on adding online courses to my pedagogical quiver.  It is hard to do.  I spent two hours today hearing about the support opportunities available on campus, which are impressive (though I usually find campus support targets other disciplines better than it does legal education).  Trial by fire starting next week:  both my classes will meet via Google Hangout for four sessions.  I did that once last fall, and the kind way to describe it was "disaster."

Any experience with this?  What technologies have worked and not worked?  How do people accomplish the interactive parts of class?

Boycott!

Here's a proposal for some demand-side collective action from the Faculty Lounge.  Will it take?  Should it?

Productive Co-Bloggers

Every so often a publisher sends me one of those books geared to the student audience that I hide in my cabinet because I'm sort of embarrassed at how helpful I find it to be in my teaching.  Today I received Ferriell & Janger, Understanding Bankruptcy (Lexis, 3d ed., 2013).  I've already enjoyed the first chapter on "General Principles."

How do you all do so much and still keep up with your running?!

Media coverage of antitrust

I find antitrust in general antitrust is both underreported and badly reported in the main stream media, both on its own terms, and relative to other financial and legal issues.  I fully understand our area ranks below war and peace and national electoral policy in terms of newsworthiness but generally find the coverage kind of amateurish and episodic whether on cartel enforcement, unilateral conduct, or mergers. 

I am curious whether you agree and what can be done to improve coverage because without public awareness, competition policy will continue to slide to the fringes of national economic policy.

I also want to single out two examples of recent coverage, one good and one dreadful.   The New York Times book podcast from this Friday had a segment on the new complaint by independent book seller against Amazon and the e-book publishers accusing them of tying ebooks to the Kindle device, effectively foreclosing independent book stores from selling e-books through their own sites.  Trust me, you don't want to listen to this silly discussion.

However, NPR Planet Money has a great recent episode on Mavericks, Monopolies, and Beer on the INBev/Grupo Mondelo acquisition that I thought was terrific.  It explains in plain English the merger laws, market definition, the competitive fringe, mavericks, and coordinated effects.  I plan to assign it in my class and have posted about it on our Institute's Facebook page. 

Mid-east Marathon Peace

I read today in the Times that the Jerusalem Marathon raises hackles for running into the contested portion of that city.  Apparently there are repercussions threatened against the sponsor New Balance, and that last year's sponsor, Adidas, faced similar threats.

A. I would think a marathon -- and at 18,000 runners, a big one -- would be the ultimate peace gesture.  Can't we all just get along?
B.  Glad I wear Asics.  Others should be safe in their Kinvaras.