November 27th, 2012
June 10th, 2011

Why Propping Up Old Business Models Is Bad For The Economy And Bad For Innovation

From Mike Masnik's too-big-to-fail? dept: “Certainly a common enough theme around these parts is the effort of old companies with legacy business models to do everything in their power (often through regulatory capture and other political tricks) to retain their market position by regulating in a specific way. This means regulations that empower legacy firms specifically, or by outlawing and/or limiting disruptive upstarts. All too often, these firms succeed in convincing politicians (and even the press and some portion of the public) that their own potential failures mean the failure of a larger industry as a whole. And yet, that’s almost never the case. In fact, the protectionism often does the exact opposite of that, in that it prevents the necessary innovations from flourishing, thereby limiting an industry and, at times, making it uncompetitive with other industries in other countries.

A recent Planet Money episode discussed this in talking to economist Tim Harford about his new book, Adapt, which talks about…read on.”