EI News and Notes Spring 2017

Economists Ink: A Brief Analysis of Policy and Litigation

Report on the Video Game Industry

Stephen E. Siwek of EI recently wrote Video Games in the 21st Century: The 2017 Report. The report, which was done for the Entertainment Software Association, measured the economic contributions that the U.S. entertainment software industry has made to the U.S. economy. The report found that in 2016, video game software sales exceeded $24.5 billion. Direct employment in the industry exceeded 65,000 employees, and the total employment that depended on the industry was over 220,000 employees. From 2013 to 2015, the industry’s value added grew by 3.7% per year after adjusting for inflation.

Study of the Eight Voices Rule

EI economists Hal J. Singer and Kevin W. Caves published a study of the Federal Communications Commission’s Eight Voices Rule. The rule, which they discussed in an article in this newsletter’s last issue, prohibits mergers between television stations in the same Designated Market Area (DMA) unless at least eight independent broadcast television stations would remain in the DMA post-merger. The study uses an econometric analysis to find that markets with fewer than eight stations do not have higher local advertising rates than markets with eight or more stations. It concludes that the Rule “imposes an economically arbitrary threshold, fails to advance the Commission’s stated objective of promoting competition, and proscribes transactions that would likely be deemed procompetitive under conventional competition analysis.”

Court Grants Class Certification

The District Court for the Northern District of California certified a plaintiffs’ class of end purchasers of lidocaine patches. The case involved allegations that a reverse payment settlement in patent litigation raised prices for that product. EI economist Hal J. Singer testified on behalf of the end-purchaser plaintiffs. The judge found that Dr. Singer developed a plausible method to determine but-for prices based on common proof. The end-purchaser plaintiffs were represented by Heins, Mills, & Olson PLC; Cohen, Milstein, Sellers, & Tolls PLLC; and the Joseph Saveri Law Firm Inc.