McKenzie's Defense of Apple
By David Henderson
Interestingly, since 2010, when Apple and the publishers were supposedly conspiring against consumers, e-book sales have escalated by several hundred percent and as a percentage of all book sales, perhaps, in part, because of the so-called “anticompetitive conspiracy.” That fact is prima facie evidence that the “conspiracy” is pro-competitive.
In the case of e-books, market collaboration, which leads to higher prices, can be doubly beneficial. E-book buyers can buy their books on an alternative platform, the iPad, with greatly enhanced features that the dominant platform, Amazon’s Kindle, couldn’t come close to matching in 2010. It’s no wonder that Amazon has responded to Apple’s entrance into the e-book reader market by bringing out the Kindle Fire and that most (not all) new e-readers on the market since 2010 have tried to emulate the iPad, not the Kindle.
This is from Richard B. McKenzie, “In Defense of Apple,” the Econlib Feature Article for July. The whole thing is well worth reading. In it, McKenzie takes on the conventional monopoly model, showing its limitations when the antitrust authorities apply it to markets where firms need at least temporarily high profits as a spur to innovation.
I’ve known Richard since sometime in the 1980s. I remember being at a conference in Charlotte, North Carolina with him when he had a copy of Mikhail Gorbachev’s newly released book, Perestroika. Richard thought Gorbachev really wanted to change things. “Yeah, right,” I said to him at the time. I was deeply skeptical that a person who made it to the top of the Soviet political system would want to change things in a fundamental way. Well, I was wrong and Richard was right. He has often said things that seemed radical and then became the conventional wisdom within a few years. I think his article on Apple fits that pattern.