Independent Institute Response To Phillip Hallam-Baker ("network externality")

[Paul Spirito]

David Theroux <DTheroux at independent.org> wrote:

> If you knew anything about the academic debate over "path dependence" 
> ("network externality") theory you would know that the work by our 
> research fellows, Stan Liebowitz and Stephen Margolis, has been 
> appearing in the leading, scholarly, peer-reviewed, economics 
> journals for the past ten years.  They have conclusively shown that 
> "network externality" theory has absolutely no empirical evidence. 
> And, no economists or any others have been able to show any errors in 
> the devastating Liebowitz/Margolis analysis.  Indeed, hundreds 
> academic economists have signed our Open Letter agreeing with this 
> analysis.

Not an argument, of course -- also, would you be more specific? You
appear to resemble remarks made by Paul Krugman in Slate a few years
back:

http://slate.msn.com/Dismal/96-08-15/Dismal.asp

       So why does the supply-side idea keep on resurfacing?
       Probably because of two key attributes that it shares with
       certain other doctrines, like belief in the gold standard:
       It appeals to the prejudices of extremely rich men, and it
       offers self-esteem to the intellectually insecure.
       
       The support of rich men is not a small matter. Despite its
       centrality to political debate, economic research is a very
       low-budget affair. The entire annual economics budget at the
       National Science foundation is less than $20 million. What
       this means is that even a handful of wealthy cranks can
       support an impressive-looking array of think tanks, research
       institutes, foundations, and so on devoted to promoting an
       economic doctrine they like. (The role of a few key funders,
       like the Coors and Olin Foundations, in building an
       intellectual facade for late 20th-century conservatism is a
       story that somebody needs to write.) The economists these
       institutions can attract are not exactly the best and the
       brightest. Supply-side troubadour Jude Wanniski has lately
       been reduced to employing followers of Lyndon LaRouche. But
       who needs brilliant, or even competent, researchers when you
       already know all the answers?

> (For 
> your information, it was the acclaimed, New Left historian Gabriel 
> Kolko who first showed how antitrust has been used repeatedly for 
> corporatist purposes since its initial adoption.)

Why should this impress us? Do you always break things down into left &
right? Ralph Nader & Pat Buchanan can't /both/ be wrong about trade, can
they? Oh, my.

> you apparently prefer to defend the blatant campaign 
> for corporate welfare (antitrust protectionism),

Fyi, Phill has opposed the MS antitrust case.

> Incidentally, so you do not continue to embarrass yourself, I would 
> suggest you first learn the difference between the terms, "network 
> effects" and "network externalities."  Reading the book, WINNERS, 
> LOSERS & MICROSOFT, would make an excellent way to do so.

Assuming we're suspicious of spending our money & our time, would you
provide links to articles?

Thanks,
Paul