And then FT's Izabella

EmmaZahn — Mon, 25 Mar 2013 18:59:25 +0000

In reply to Google's Google problem or what is the tipping point at which a good or service becomes a public utility?

And then FT's Izabella Kaminska expands the question to retail banking:

What Google Reader tells us about banking and nationalisation | FT Alphaville

the government did not intervene because it wanted to “have a go” at banking. It intervened because it wanted to make sure that payments systems, cash machines and deposit accounts were still there and operational in the morning. It intervened because it needed to support what the private sector could no longer economically afford to support, but which was necessary to be supported for the good of society.

Which is why the government taking charge of a service like RSS for the benefit of the public good — or for that matter providing the country with universal internet or high quality media — should not necessarily be treated with suspicion or mistrust. In the civilized world there is a perfectly reasonable way to ensure arm’s length detachment and to protect such institutions from the political meddling of government.

Paul Krugman weighs in on the

EmmaZahn — Mon, 25 Mar 2013 18:53:55 +0000

In reply to Google's Google problem or what is the tipping point at which a good or service becomes a public utility?

Paul Krugman weighs in on the above link:

The Economics of Evil Google - NYTimes.com

Basically, if the monopolist tries to charge a price corresponding to the value intense users place on the good, it won’t attract enough low-intensity users to cover its fixed costs; if it charges a low price to bring in the low-intensity user, it fails to capture enough of the surplus of high-intensity users, and again can’t cover its fixed costs.

What Avent adds is network externalities, in which the value of the good to each individual user depends on how many others are using it. To some extent the monopolist can capture these externalities, since they add to the price people are willing to pay, so I’m not sure they change the logic of provision or non-provision. But they mean that if the monopolist still doesn’t find it worthwhile to provide the good, the consumer losses are substantially larger than in a conventional monopoly-pricing analysis.

So what’s the answer? As Avent says, historical examples with these characteristics — like urban transport networks — have been resolved through public provision. It seems hard at this point to envision search and related functions as public utilities, but that’s arguably where the logic will eventually lead us.

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And then FT's Izabella

Paul Krugman weighs in on the