Christopher Koopman

How the Internet, the Sharing Economy, and Reputational Feedback Mechanisms Solve the 'Lemons Problem'

This paper argues that the sharing economy — through the use of the Internet and real time reputational feedback mechanisms — is providing a solution to the “lemons problem” that many regulations, and regulators, have spent decades attempting to overcome. Section I provides an overview of the sharing economy and traces its rapid growth. Section II revisits “lemons problem” theory as well as the various regulatory solutions proposed to deal with the problem of asymmetric information, and provides some responses. Section III discusses the relationship between reputation and trust and analyzes how reputational incentives have been used historically in commercial interactions. Section IV discusses how information asymmetries were addressed in the pre-Internet era. Section V surveys how the evolution of the Internet and information systems (especially sharing economy reputational feedback mechanisms) addresses the “lemons problem” concern. Section VI explains how these new realities affect public policy and concludes that asymmetric information is not a legitimate rationale for policy intervention in light of technological changes. We also argue continued use of this rationale to regulate in the name of consumer protection might, in fact, make consumers worse off. This has ramifications for the current debate over regulation of the sharing economy.

Rethinking Taxi Regulations: The Case for Fundamental Reform

New technology can cause significant changes in an industry, potentially improving both consumer welfare and governance. The initial reaction of many regulators to the advent of “ridesharing” platforms such as Uber and Lyft was either to outlaw them or to burden them with the same level of regulations as taxis. But policymakers are now beginning to take a new approach. They are aiming to achieve regulatory parity between ridesharing platforms and taxis by deregulating taxis. In a new study, “Rethinking Taxi Regulations: The Case for Fundamental Reform,” Mercatus research fellows Michael Farren and Christopher Koopman and senior research fellow Matthew Mitchell determine that taxi regulation is outdated in light of the transformative technology changes and business innovations of the last few years. Now is an opportune time for fundamental reform of the entire regulatory regime to create a fair, open, and competitive transportation market.

The Changing of the Guard: The Political Economy of Administrative Bloat in American Higher Education

The cost of higher education in the United States has risen dramatically in recent years. Numerous explanations have been provided to explain this increase. This paper focuses on one contributing factor: The dramatic growth in the size and expense of non-academic administrators and other university bureaucrats, which has outpaced the growth of expenditures on academic programs. Given that university faculty are typically viewed as the constituency that primarily controls universities, this growth of non-academic employees and expenses appears to be anomalous. Some theories are provided to explain this transition.