Re: Krugman on Gould, et al.

Robin Hanson (
Wed, 03 Mar 1999 16:25:20 -0800

On 1/26/99 EST, T.0. Morrow wrote:
>>Paul Krugman is a very good economist.
>>Robin Hanson
>Take my comments with as much salt as you like, given that I tout no formal
>degrees in economics, but think that Krugman fairly well botched the "network
>externalities" issue. The mere fact that he calls them "externalities"
>reveals error. Liebowitz & Margolis convincingly argue that "network
>*effects*" more properly fits the phenomena. We amatuers may regard that as
>an arcane distinction, but surely professional economists should use
>consistent and accurate terminology.
>Krugman has moreover made highly suspect and hotly controverted claims of
>having pioneered the idea of network effects, has bought into the QWERTY myth
>too uncritically, and has failed to revisit his views in the face of new and
>contradictory evidence.

Searching for "Liebowitz Margolis network effects" at AltaVista gets me this 10/98 CATO policy analysis:

Their only mention of Krugman is: "The most commonly cited example in the network-externality, path-dependence literature is the prosaic typewriter keyboard. The importance of this example can be gleaned from Paul Krugman's 1994 book `Peddling Prosperity.' In that book Krugman speaks glowingly of this entire literature in a chapter entitled "The Economics of QWERTY." He does, however, appear to have altered his views when made aware of the facts presented below."

These authors don't complain about the phrase "network externality", and I see no reason to complain either. Krugman did pioneer their use in a particular context, and he did admit that he'd been tricked by the QWERTY story.

Robin Hanson   
RWJF Health Policy Scholar             FAX: 510-643-8614 
140 Warren Hall, UC Berkeley, CA 94720-7360 510-643-1884 after 8/99: Assist. Prof. Economics, George Mason Univ.