Brian Albrecht

Will tariffs spur innovation? Research suggests not.

Another excellent newsletter by @briancalbrecht.bsky.social on whether tariffs are likely to increase innovation, with lots of top references from empirical research (from @rjuhasz.bsky.social , David Autor, Nick Bloom, @johnvanreenen.bsky.social & others)

🔗 www.economicforces.xyz/p/will-tarif...

Prices are signals (and politicians keep shooting the messenger) Economic policy insight #1: A price is a signal wrapped in an incentive.

Economics has core insights that get ignored by politicians.

The most fundamental?

A price isn't just a number—it's a signal wrapped in an incentive.

But why do policymakers need to know this?
www.economicforces.xyz/p/prices-are...

That's exactly my point. You want to align private and social incentives, not simply reduce traffic no matter what.

You're right. It's my fault and the subset of the audience who can't bother to read 1k words's fault.

Basically all of my replies are reenforcing why I wrote the post. People assume any reduction of an externality is good so reducing driving is necessarily good.

If that's the goal, you wouldn't shut the fee off at night

I'm once again asking people to read what I actually wrote www.economicforces.xyz/p/congestion...

I lament this change. Of course.

And I don't hold you entirely responsible for it, in case that wasn't clear.

Economists Are in the Wilderness. Can They Find a Way Back to Influence? Economists have long helped to shape policy on issues like taxes and health care. But flawed forecasts and arcane language have cost them credibility.

Tons of food for thought in this great article by @bencasselman.bsky.social.

www.nytimes.com/2025/01/10/b...

Exactly my thought

Shifting people to MTA benefits MTA commuters? The sharing of fixed costs of the MTA is greater than the congestion costs there

That's not obvious at all.

Very weird. Sorry!

I acknowledge that issue. I don't think anything changes because of that. Unless you want to assume the optimal amount of driving is zero.

Economic Forces | Substack Pondering price theory, past and present. A weekly newsletter covering all things economics. Click to read Economic Forces, a Substack publication with tens of thousands of subscribers.

Not sure why. It's working for me. Try the home page www.economicforces.xyz

Congestion pricing reduces driving. That doesn't make it a good idea. I'll take the win for supply and demand. But is it a good policy?

Raising the price of driving reduces driving. NYC's congestion pricing is clearly another W for economic theory. (Many such cases.)

But is it a good policy?

After all, less driving isn’t the goal. I walk through how to think about the costs & benefits www.economicforces.xyz/p/congestion...

Personally I think has implications for our broader discussions about competition and antitrust.

High measured markups don't capture everything. Variable markups aren't necessarily bad.

We need to understand the full consumer experience before making welfare judgments.

Products that SUBSTITUTE for time (think meal prep vs restaurants) -> too few firms enter.

Why? Consumers can switch to using their own time, increasing demand elasticity and killing some efficient firms.

When time and money are COMPLEMENTS (think video games) -> too many high-cost firms enter.

Why? Firms know consumers won't substitute away. They need both product and time. Those high markups support inefficient entry.

When products need lots of customer time (complements), too many high-cost firms enter. When time and products are substitutes, too few firms survive.

Consumers in this economy do not internalize that their decisions to allocate labor between off-market time and market production affect firms’ profits and the incentives to enter.

This is an additional economic force that is not present in models without off-market time.

Our key, framing insight:

When consumers provide time to use products, posted prices aren't the whole story. We need to look at "holistic markups" that account for both the money price AND the time cost to consumers.

The standard monopolistic competition model says firms need constant markups for efficiency.

Once you add consumer time use, variables markups can be efficient and constant markups can be inefficient.

When you buy a product, you pay twice:

1. Money to the company
2. Time to actually use it

Most economics ignores #2.

With Tom Phelan and Nick Pretnar, we show how this consumer time use changes markups, firm entry, and efficiency. 🧵 www.briancalbrecht.com/Albrecht_Phe...

Also, I have another new paper where markups don't measure the distortion in the economy. Unfortunately, prices don't either, so not sure what to do with that. www.briancalbrecht.com/Albrecht_Phe...

And it's not like markups are a good proxy for other things. My work www.briancalbrecht.com/Albrecht_Dec...

Also the Conlon et Al paper

The real issue is that market power (at least if we mean something like markups) isnt necessarily hurting anyone.

Cutting costs by 20% and only dropping prices by 10% is not harm. I don't know how this isn't the end of the discussion around say Posner's argument to focus on market power.

What we know about the rise in markups It's not much.

I agree. And the focus on market power has been overblown. Even on its own terms, the evidence isn't strong www.economicforces.xyz/p/what-we-kn...

eg, Bhattachara, et al (2023). Even in concentrated markets (HHI>2000), 25% yield lower prices, 25% higher ones, and 50% no real change. In this concentration range, supports inference that roughly 75% produce cost reductions sufficient to reverse price effects. papers.ssrn.com/sol3/papers....

That's one of my takeaways. I'm not sure they'd agree though, but argue the facts they document are about something besides merger enforcement.

Which papers did you have in mind? Nate Miller's?