Hello ladies and gentlemen, thank you for joining me and welcome to Chopron. This city is in northwest Hungary, it's a very beautiful, attractive historic city and what we're going to do in today's video is we're going to go and explore what's left of the old city walls. So where I'm currently walking, I'm outside the old city but we're going to go and find them now. It's not quite like York in the UK or Chester where you walk around the top of the city walls. The city walls are hidden behind buildings but there's quite a lot of them. You've just got to really look for them. So this city dates back to Roman times, then it was called Sabantica but the Romans eventually deserted the city. Between the 9th and the 11th century the Hungarians arrived and they began to build the city up. They began to fortify it. See this rather communist looking building here? It's through here where we find the city walls or our first glimpse of the city walls. Doesn't look very exciting you know just the new dustbins when we go through here. And here we are, here are some of the city walls. Now this wall is going to get quite exciting because as I said they're hidden behind buildings so we've kind of got to look for them. So these city walls were what the Hungarians would have built up. So like I say they date back between the 9th and the 11th century. We're down here and see if we can go kind of into them. I think we'll be able to go up on top of them some of the time. But as I say we are kind of behind around the back of buildings that is a doorway here. Not like it goes anywhere, it's just going in anyway. And it kind of goes through to another doorway. And I appreciate you now can't see a lot. And that door's locked so let's go back out because it's a bit pointless being in the dark. But at the same time quite exciting even going there. So let's go round and go on top of the city wall. There was a little bit more history. There was that period of Hungary where the Ottomans took over most of Hungary. Well they ravaged the city but they didn't take it over. So what happened was a lot of Hungarians began to flee here and they would sort of hide out and live here. And its importance grew. It's quite interesting because there's basically this map. We're going to follow this yellow line around and follow the city walls. And it tells you a bit about them. So this is the Bayley promenade. So you can see it's quite fortified. If we go up here, so the city walls they do lock them at night but they lock them about nine o'clock in the summer. And it's about quarter to eight so we should get round this. We've got these steps here and we'll be up on the city walls in a moment. So like I say it's not quite like York when you think of a city wall walk. It's a sort of area of public land between two buildings and then there's various random gates going off that are locked up probably because there are people's houses behind them. But here we are. We're up in one of the towers. If you look through there you'll be able to see where we went. So quite exciting. That is supposed to be one of the oldest apartment blocks in Chopron which was cut right through the city walls which is a bit of a shame. There's not much more down there other than this other tower. I won't go down there because we've got quite a lot of other bits of city walls to get through. It's a bit weird you've got this bit of concrete brutalism and then you've also got against the old city walls. So we're going to go down here. It also involves walking through lots of other odd buildings and almost like through people's gardens. There's a bit of a mess on this graffiti through little random courtyards. It's quite an exciting walk. So we come to here and we're in a courtyard. We're going to go through. That way we'll take us into the narrow streets of the old city which we'll do more of or we'll do some of that later. We're walking through some more courtyards. There's lots of Baroque, Austro-Hungarian buildings in this city. It's a really beautiful city. The other thing the city is quite well known for is the Choproni chur or Choproni beer.  It's a very nice building. Nothing to do with the video at all, but I always like to see them. There's a Ladeniva. I think they're the best 4x4 ever or if that one the best cars ever. Ladeniva, quite a new one that is. Anyway, back to more ancient history rather than more modern history. We're going to go and find the city walls again. And here we have probably the most obvious part of the city walls the bit that people always do see. It's a bit here. In fact, wherever we're in that courtyard, I think if we've gone down, we could come down those steps. This is a pretty big, big round tower. But if we go down here, my plan is to sort of find our way around the back of the building. So you get a good idea here. This is one of the main streets outside the city walls. And out here, the streets are a lot wider, a lot more space. There's lots of nice restaurants and places to get ice creams down there. But if we go down here, it's going to be completely different. There's a lot of churches in the city. That one possibly is a monastery. I'm sure one of them is, but I'm not entirely sure which one. Possibly that one. So we come down here. So where are we now? So this is still the Bailey promenade. So like I said, there was that huge tower behind us.  They've kind of put these strange concrete sort of bits against it. Then if I have any light, you can actually walk in and out of them. But I'm not going to, because it's probably a bit dirty behind there. But yeah, look at that. That's weird. Anyway, let's continue to follow them. So they disappear behind this hat, but I'm very confident we can follow them. I'm just going to keep going really following. This is where it's going to get exciting. We're going to start walking through backyards and through restaurants and all sorts. It gets really odd. So we've got up here, and I think I'm about to walk through a restaurant where people are eating their evening meals. As you can see, I'm quite literally out. Go through here and come up here. There's another little courtyard. So that looks nice. All those plants growing. Here we have another gate, but I think this has been rebuilt. You can see we're crossing like an old, wait, it's a modern old drawbridge. This is clearly not original. I quite like it. So if we go into here, oh yeah, you can see that's an old tower. Now if we go up here, I think we'll be up on the city walls again. I also want to do some more down on the city walls again. So yeah, look, we're up here on the city wall. But they've actually built buildings against the city wall. So when we go down there, we won't be able to see this bit. But if we step into this little tower here and have a look out the window, you can see we're going to walk along Neanex and we will be able to see it. But first, talking of the old city, we go to the end here. We can have a look at some old ruins. It's anything back. I'm not going to put a date on them, but some old ruins and you can clearly see the city wall goes around there. So we're going to go back down. We're going to walk around there and keep going. That, by the way, is the fire tower. More of that later. But that is the tower. Going back to the Choproni beer, which I mentioned, that beer is on, or that tower, rather, is on the beer. It's kind of like the symbol of the city. So the line of the city wall. We've got to go back through this strangely modernised bit or rebuilt bit to continue. We're going to walk through some more courtyards and through some more residential bits, which is kind of exciting because if I didn't know about this city wall, I probably wouldn't come into this little courtyard because I wouldn't be sure if they're private or not because I know I can walk all the way along here. So we come through here and ahead of us, that would take us back out onto that main street again. What we're going to do is we're going to go down here now. This is looking quite exciting. So we go down here. So let's do not enter there because that goes into flats. That's perfectly understandable. We come down here. We go under here. Look. I don't want to disturb them too much, but look. Look at those cute little kittens asleep there. Mochka. That is a cat. Chitza is kitten. So look at them there asleep. I don't want to disturb them, but they're so cute. Anyway, let's go round up here. So, yeah. Well, look, there's a bit of old city wall there hiding in amongst these houses. Go round here now. Yeah, so, okay. Am I now walking through someone's... I think I'm like literally walking through someone's back garden and I've just walked into another restaurant so there's people eating food there.  A moment ago, we were up there in that window. I think it's an idea of where we've just been. So we're going to continue to follow these very obvious city walls around here. I just like how it's so hidden. I've been staying in this city now for three days and it's only taken me this afternoon when I discovered there's this hidden world of city walls. And that is like the narrowest building ever. How do you get onto that balcony? So narrow. That's weird. Oh, I see it's like a stairwell tower. And on the stairs go like that. Still don't quite get it, but yeah. Interesting building. Right, where are we now? So we're down... those ruins I showed you are behind this part of the wall. There's a more modern... if you sort of think this is the ancient level of the ground, that's the modern level of the ground. So these buildings were sort of down at basement level. So the first floor from the street will be up there, where those windows are, which you can clearly see by the level of that modern bridge. That's for those ruins I showed you. We're now down at the level of those ruins. What I'll do, I'll stick the camera through here. You'll be able to have a look. Bring the camera back. Now there's like an outer and inner walls here. The outer walls are rather ruined. I'm going to step over them under this bridge and follow this cobbled street. And in a minute we'll come to the fire tower. So the fire tower is the tower you see on shop only beers. Now I'll never quite get these hacks, what it's job is. I understand that the city at one point did burn to the ground. And when they rebuilt the city they built a fire tower.  I went up there the other day. You can go up to that level there. It's great, you get brilliant views. And then when I came back down to the ground I had, you've guessed it, a pint of shop only. So yes, that is the, effectively the northern gate. Now the city walls have been sort of obliterated here. I think that slab of concrete is to show you that was the walls. It's going to get even more kind of strange now to walk. But what we're first going to do, we're going to walk underneath the fire tower into one of the main squares just to let you see the classic part of Chopron. I think what we're going through here is called the Foutier, which I understand means the main square. So we're right in the old city centre. So there's the tower above us. Lots of places you can, you know, have meals here as well. Beautiful old church there. If you visit Chopron and you're not sure what to do, there's a tourist advisory centre in that building. So, you know, you can go there. So this is, now we're in the main square of Chopron and it's beautiful. The Foutier, look at that. The tower, it's amazing sight. But we've got to continue following these walls. Now these walls, they go behind those buildings there. So we've got to go and look for them now. It took me a few goes at finding them. I missed them the first time completely. So, look at that. Like I said, this was also the northern gate of the city. So what we're going to do, we'll go through here. So the reason I had to rush that bit there was there was some music playing in that restaurant and you may or may not know but when you're making videos for YouTube you've got to be very careful. Sometimes music gets in the back of your video and you're in trouble for copyright reasons. So that's why I rushed that bit. So apologies. I think this arch here is showing where the wall would have been. So we go through. So I've actually come out of the city. Let's go through here now. So it says here, Baelic promenade. So that's like basically following the wall. So, it's got really quiet now. Feels like a bit of a ghost city. It's just like no one about. You know, it was all people eating food and it's quite lively around there now. It's just like dead. You know, you won. There's the city tower there. The fire tower, rather. If you go and visit the fire tower you can also go in there and see lots of historic stones which they found around the city. So it's worth going to see that. Now we're following this. So, as I said, it's completely different to sort of York or Chester. York or Chester, they kind of go up in the trees. Well, we're kind of down in the trees. With the odd tower now. So it's pretty private what's on that side of the tower. But it's fascinating to follow. Look at this. I think we're about to walk through another restaurant now. I don't know if this restaurant's open but it's got all of its tables out. So you can actually sit here and have a meal if it's open against the backdrop of the city wall. And, of course, have a pint of Chopproni which says, although the camera's not been out, it does say Chopproni on that umbrella. So yeah, it'd be quite nice to... I'll probably... Chopproni, I might have to have a pint on that when I'm finished.  And then eventually it will eventually come to an abrupt end. At the other end, there's not a lot left at the wall. But so far, we've done quite well. We've seen quite a lot of the walls. The last time I did a video with some Hungarian city walls, completely the other side are hungry, I was in Pate, which is Hungary's fifth largest city. And I did a video there where I went into one of the old baleys and we climbed up to the top. So if you're interested, have a little link on screen now. Here, I'll see that video. We're going to continue along here. It says Attila Eritreum, which means restaurant there. It actually says restaurant as well. Because we're surrounded by Austria. There's a lot of... Most of the signs are written in German as well. Look, the path gets really narrow here. Should go here. I don't think many people do this part of the wall. You see everyone looking at it on the busiest side of the city and taking pictures. But I don't think so many people come around here to see this part of the walls. And some really bad I found. It says, give you an idea, we started around there. We've been all the way around there. That's the fire tower. We're now here. So we've got one last long straight to go. That makes it sound like a race track. We've effectively circumnavigated the old part of the city. We've weaved in and out a bit. So here we get to another one of these little gateways. So yeah, it does say April to September. Open from 9 o'clock to 9 o'clock. So yeah, I haven't got a rush. I've still got a fair bit of time. I'm going to go down this passage right now. Interestingly, if you ever look here, looks like there's been something built out against it. See these sort of apertures in the wall along here? So there's a floor about where my head is. Not too sure. This building looks a bit abandoned. And then as we continue on, see, look, this is quite interesting. There's that tower. Someone's effectively built into the tower. So that's now part of someone's house. Not too sure. And we're kind of behind other people's houses and flats on what really is a nice, pleasant, quiet area. So I'd say if you live there, you look out at the old city walls, which no one really knows about. Or at least they don't know too much about this side. There's benches facing each other. It's like they're on a train. You don't often see benches like that unless you're on a train. Anyway, and here we have the back of some more flats with a Christmas tree growing. Now I wonder if that was someone's Christmas tree one year and I've just planted it. There seems to be a bit of a section of the walls missing here. But then they start again there. I think we've come to the end. I think what I'll do, because we're coming to the end, I'll go in and finish inside the city walls. It sort of seems appropriate to start it outside. So we've effectively, we have now done the city walls. There might be, there are, yeah, there are a couple of odd fragments of the walls, but I understand there to be in private kind of courtyard. So we can't actually go and see them. So we won't do that. So if pretty much comes to the end, come out here by church. And it's done and finished in one of the beautiful narrow streets. So it really is a really nice city. I've made a few other videos while I was here. The other video I made, I went to a model village just on the edge of the city. And there was certainly a model of the fire tower there. And I think there was a model of that big church we saw. And that was currently free to visit because the model trains weren't working. But if you're interested in that video, have a look at Lincoln screen now, that shop on the miniature. And now here we are. I'm the little person in the big city. Well, look at that tower. Reminds me of Kubrick's team museum in London to look at, but it's not a team museum, it's a church. That there is called Templon Utska. Utska Street. And I think you probably get. Templon is church. There you go. It's a church. So I hope you enjoyed this video. Thank you very much for watching. Please do feel free to like, subscribe, and comment. And from the beautiful city of Chopron in North West Hungary. Goodbye. This on that.


Welcome, I'm John Caldera, president of the Independence Institute and your devil's advocate. I've been wanting to do this for a long time. I'm so thrilled, he's in town. You're on Brooke who runs the Ein Rahn Institute. And if you don't know who Ein Rahn was, let me do the quick thing, which would be, she's an author. She wrote a few books that seemed to have some lasting staying power. And would you say she was one of the first to really put out a libertarian free market philosophy in a way that people could digest through her stories? No question. I would even say she was the first to really, and maybe the only one, to really put together a comprehensive free market philosophy. There'd been a lot of economists who presented the free market, proved that it worked, showed that it worked, why capitalism actually functions. But in terms of philosophy, in terms of an epistemological, moral foundation for capitalism, who else is there? Talk about who hates Ein Rahn. So here's this little Russian immigrant who got out of Russia in the 30s, was it? I'm trying to remember. 20s, she was born in 05, so she witnessed the revolution, lived under communism through her teenage years, and in her early 20s made it here, kind of the last little window of opportunity to escape Russia, and she got out. If she would have stayed, she would have been killed. I mean, she was a resisting communism at every turn, and she was already on a blacklist. So she makes it here. And her name was Alice Rosenbaum. Rosenbaum, that is. So she grew up as a middle-class Jewish family in the Soviet Union, and made it here with nothing. You know, and if there's ever been an American success story, this is it. She came here, she came to Hollywood. Her dream was to write, and to write scripts. And she did. I didn't know this until I started doing some research. She worked for Cecil B. DeMille. I mean, first day in Hollywood, she meets Cecil B. DeMille. She's at the studio. She's giving a letter of introduction, which you got from a relative in Chicago.  And she walks out the door, and there's this big limo sitting outside, and Cecil B. DeMille is in it, and he drives by, and he stops, and he, because she's staring at him. I mean, what are you staring at? And she tells him, I'm here just here from Soviet Union. I love American movies. I love you, your movies. He says, get in. He takes it to the back lock of the king of kings of all movies, right? Which he ends up being an extra in. This was a huge production. I mean, this is a huge sound stage. The extra is all over. You said you want to write for the movies, you got to see how movies are made. So here she is, a young woman from the Soviet Union, and she's just a most in this. And from there, she's an extra. She works in a wardrobe department. She does any odds and end job to get by, and ultimately, write scripts, write plays, and writes some of the best, most well-known American novels in history. Start with her name, because a lot of people mispronounce Ayn, and so it's Ann Rand, but that's all right. I heard that Rand came from the Rand typewriter she used, is that Fib, or is that? Not true, it's completely falsified. So there's a lot of questions about where she came up with the name, but it turned out that she came up with Rand before there was a Rand typewriter. So the name is where we did it. Man, that's just how good she is, right? So, you know, she came up with a different name because she wanted to be out. She knew she was going to write anti-communist content, and she wanted to protect her family. So she chose a pen name, the distance herself from the family name. I don't think it would have helped because the KGB is a little bit more sophisticated than that. They figured it out pretty quickly. But yes, she wrote under their name, Ayn Rand, and when she married, she used her legal name, which was her husband's family name, but as a writing name, it was Ayn Rand. Let me tell you my introduction, which I have always been small L, libertarian, that the idea that two people can have a relationship based on what is important to them, this consensual relationship, and that other people can use the coercive power of the state to stop them is what I think one of the most repugnant hate crimes there is. And, you know, as a young man, I didn't know how to express that really well, but there's something that this is wrong. When a collective of people use a power to say, you and you want to do something together that hurts no one, but you're both benefit from it in whatever ways you figure out. And it might be weird, I might not understand it, I might not like it, but to say, no, you can't do that. There was something that just ripped me inside with anger of how dare you, the beauty of free association among men is what life's about. And so, when I found, I think the first book I read of hers, because I'm dyslexic, I don't know how to read, all right? It's really difficult. So I looked at all the sizes, and there's Atlas Shrugged, and then there was Fountain Head, and then there was, all right, Anthem, Anthem, I can do this, this was this big. And I was like, finally, somebody is talking about something that touched me. It's like, this is what I've been meaning to say, and it's in words. And then once that started, I had to read the rest.  For me, it was finally, somebody has written out what I feel, what I feel, what I believe. And a lot of people, I hear that kind of response all the time. For me, it was very different. I grew up in Israel, and was raised in Israel, and a very collectivistic, very tribal culture, particularly back then, a lot less so today. You were raised to sacrifice for the tribe. The tribe was the primary, the collective was the group, the state, whatever, and I had bought into that, and when I was 16, I was an altruist, morally, I was a collectivist politically, I was a socialist politically. And a friend of mine started, you know, we used to get together to talk about ideas, and he would start, started these free market ideas, and I'd looked at him one day, and I said, where is this BS coming from? And he said, you gotta read this book, and he handed me, as the shrugged. And it took me months to read, because I fought it. I said, this can't be true, and I'd throw it against the wall, and I'd argue against it, and I'd yell at Ayn Rand, she wasn't there, of course, but by the end of the book, she had won me over completely. I mean, I'm still, right? Although, you know, the John Galt speech at the end could have cut it down just a little bit for those of us who don't have the attention. Again, maybe, but for me, it was like revelation, right? This was amazing, this was, he was a whole new philosophy, a whole new way of looking at the world that had never been exposed to, you know, laid out in front of me comprehensively. Yeah, I wanted to get to the story, but what an essay that is just as a standalone. Let me put out a couple of thoughts on this, and tell me if you think I'm hitting it right. Unlike other books on economics, or political philosophy, or relationships, what Ayn Rand did for me is she put it in a story, and the story allowed me to get a hold of this, and think about these things. Now, when I talk to people, they go, this is a ridiculous story, this is, and I go, I- Did they watch the news? Yeah. But what I'll say is, you don't take it as a novel in itself, you take it as a description of a philosophy, and we illustrate the philosophy through this story, and that makes it accessible to guys like me. Now, Ayn Rand went on to do lots of- Philosophy. Philosophy books. I can't read them. I couldn't get through one of them. Yeah, I know a lot of people can't read the fiction. Exactly, I've heard that too. I've heard that too. But see, she wouldn't agree with what you just said, because she had a purpose for writing fiction, and her dream since the age of nine was to write fiction. And to her, the key to the Found Head and Alice Shrugged and Anthem is the story. And the byproduct of the story for her is the philosophy. So it's not that she starts with the philosophy and says, I want to illustrate in a story. To her, she starts with the story, and she said, to really tell the story, well, it turned out I needed to develop a philosophy, because I couldn't find- Really? She actually writes it. She says, her goal in writing was the projection of the ideal man. Right, right? And she said, I read all these philosophers, and nobody could tell me what an ideal man was. Everything they were saying about man, I found repugnant. So I had to develop my own ethics, if you will, my own system of philosophy and my own epistemology to center man around reason, for example, and around his own self-interest, which is her philosophy, in order to be able to present him in fiction. And that's where you get Howard Walker, and that's how you get John Galt. Which are, in my mind, mythical men, archetypal men. I have a hard time saying, that guy over there, yeah, he's John Galt. No, he has John Galt characteristics. It's ideal, it's ideal we strive towards. That's how she viewed it, the perfect man. And that's the ideal that we try to model ourselves after. So I'm going to school up at the University of Colorado in Boulder, and I'm walking through the student center, and there is a student display, you either have the little clubs or whatever, and it's all about ripping on Ayn Rand, who, you know, it's like, wow, and I was like, wow. But, you know, the girl at the booth was really cute. So I was happy to, oh, I don't know. But there was this violent, and I do mean violent reaction to these books still today, some 50 years after Alice Rudd. I'd say more today than ever. I mean, not a week goes by where Salon.com doesn't write some scathing thing about Ayn Rand, or will write a regular article, but has to, in one paragraph or another, you know, take some jabs at Ayn Rand. Quigman, Paul Quigman, you know, a national economist, I guess, or pseudo economist. He, every quarter, right, on the dot, he has something that attacks Ayn Rand. Huffington Post, monthly attacks Ayn Rand. It's almost unbelievable. It's almost like this derangement that this is a cult, that this is a woman who started something and poor saps are following mine. There's some irrational hatred of this. Let me give you one aspect of it. I heard a lot of this, which was from women. Here we are, a couple guys talking about Ayn Rand. So let me ask you about this. You know, the rape scene in Fountainhead, the way that men dominated women in this and that she had this, that was a sexual thing for, that is just so wrong, it's anti-feminist. And of course, during the 70s, this book that she wrote decades earlier comes into the center of a feminist storm. Sure, but this is the absurdity of what they're claiming, right? Who else in all of American literature, including today, has a woman executive running a railroad more competent than any guy out there who is driving the man around her to succeed? She's clearly superior intellectually and as a business person morally from her brother and then all the other guys out there. Yes, Ayn Rand has a certain psychological view of sex and maybe many women disagree, maybe many men disagree. But that is a psychologically view of sex, which I think needs to be taken seriously because I don't think it could be completely dismissed. She was a smart lady. But if you look at the novels, if you look at the characters, if you look at Dominique in the Fountainhead, if you look at Dagny in Atlas Shrug, these are women larger than life. Now, not only that, think of 1957 when Atlas Shrug was published or 1945 when Fountainhead was published. These books have sex in them, right? There was no sex in 57, right? Nobody wrote about it in movies and on television. Married couples slept in separate beds, right? So she was way ahead of her time in terms of the whatever good there is in feminism, the idea of women being able to achieve, being able to be successful, no glass ceiling. Ayn Rand was way ahead of the feminist. She invented feminism from that perspective, right? As a collectivistic type, you know, women think differently than men, nonsense, yeah, she rejected all of that and I'm happy that they reject Ayn Rand. But nobody presented stronger women. Nobody presented women who were more successful, who had kind of guy stuff than Ayn Rand did. When Orson Welles made Citizen Kane, he was a remarkable thing because he had complete control. And ever since, once that flopped, nobody ever got, it became a collaborative effort, nobody could do it. And it was a flop. And then it started getting on it and discovered it. And understood how he did things that were amazing. You know, Fountainhead didn't do well at first and Atlas Shrugged really didn't do well at first, if I recall. How many copies, let's go with Atlas Shrugged, how many copies have been sold? Well, let's say both books did well. So what happened with the Fountainhead is the Fountainhead was rejected by 12 publishers. Nobody wanted to publish it. Finally, when it was put out, they only printed, I think, 2,500 copies or something like that. Sold like that, word of mouth got around. It became a word of mouth bestseller. It was unbelievably successful very quickly. So by the time Atlas Shrugged came out, publishers were fighting to get to publish Atlas Shrugged. But that was almost a decade later. Yeah, 57, 12 years later. So Atlas Shrugged was an instant bestseller. Atlas Shrugged, I mean, has sold millions of copies. Fountainhead has sold millions of copies. Total for Einrad is around 25 million copies of all of her books. The best number I know for Barack Obama for the current president, I mean, this is his greatest achievement in my mind, is that since his election, Atlas Shrugged has sold over 2 million copies. And it spiked, clearly it spiked after his election. Let's bring it to today. Now, the names have changed. The names of the laws.  There's all these. But I look at how the regulatory state is keeping people apart.  It's steam cigarettes. The landlord and the tenant. And they want to have this relationship. But the city council thought, that's perverse. We don't know. And so you can't do this. The regulations that have come in, particularly in the last six years, but even before that, it's growing, it's growing, it's growing. Sometimes I turn around and go, this is so close to that. Oh yeah, no, this is what's going on in America today. Well, give me a couple examples. Whether it's Obama, if you read the little, there's a little speech in Atlas Shrugged by the doctor who goes on strike not to give the whole plot away. And you read that little section.  The way people have made a link between the regulation of the railroads in Atlas Shrugged to net neutrality and the whole idea of the government wanting to come in and tell us what we do with the internet. What we do with our cable provider, what the cable provider does with the provider of content, with the provider. All these relationships, which the marketplace does beautifully and arranges beautifully and coordinates beautifully and the government has to step in and intervene. So at every level, you know, Sabine's Oxley is probably a classic that could be taken out of the book. But this has been 100 years in the making of these regulations. Even down to a tiny area, I just heard today of a yoga studio school has decided to certify their instructors. And so now they complain for all their competitors who haven't been certified the way we're certified. You need to put them out of business and the state just sent out 88 letters to do this kind of stuff. And to take these people who are just having relationships, consensual relationships and saying, you two people, you can't have the relationship. So in California, you need a license to shampoo here. Right? And you see this across the board. You see it. You think I care about that? I know you don't. I don't care about that. I know you don't care about it. I know sympathy about that. I care about it, because it raises the cost of shampooing my hair. One squeegee has lasted years. And the reason we both care about it, right, in spite of everything, is because who does this really hurt? It hurts that ambitious poor person who's trying to make a living, who's trying to get up and out of welfare and trying to get a job. And what the state is doing really is oppressing them. It's keeping them out of the workforce and keeping them out of their ability to earn a living for themselves. Help me with this. Some people get it in certain areas. I see how much the gay movement has moved in the last few decades. It's amazing. It's amazing. And people go, they just want to have a relationship. The government should not stop them from having a contractual relationship of their choosing. And then they turn around and support Obamacare, which forces people into relationships they don't want to have. And so I feel optimistic that if people understood the bigotry, and I'm talking from purely human area, I'm not talking about it's good for poor people. It's good for the economy. It's good for all of which is true, but the sin of stopping free association between individuals. Using force to stop people from interacting voluntarily among each other. And the left gets it when it comes to gay issues, and maybe Moana in Colorado, but it certainly doesn't get it when it comes to any economic issue. And here's where I think we have to go deeper. I think the opposition to, let's call it economic freedom, capitalism is not about helping anybody. It's not about economics. I think we won the economic argument a long time ago. The free market guys have had all the good economists. We've solved all the problems. We've made the argument. It's done. Although, let's make this point. A lot of people believe that corporate welfare and cronyism is capitalism. And that is just as. They didn't 30 years ago. They didn't 40 years ago. This is a modern, more modern phenomenon. Yeah, we were drifting away from capitalism. We've been drifting away from capitalism for almost 100 years. But I just want to make clear, cronyism is as ugly as any other form that stops. Absolutely. But in my view, it's almost all the government's fault. Because if I pointing a gun at you, you're going to do stuff to defend yourself. When government points a gun at business, the business is going to try to get the gun pointed to somebody else. Although, let me. It's rare that business goes to the government and starts at it. Well, let me say this. When a business has a foothold in whatever they're doing, they want to use the government to close down entry into that business. We see it with taxicabs.  And that happens a lot. But the problem is that when somebody has the power to do it, the problem is that somebody has the power to do that. But my favorite example of this is Microsoft pre. And then we'll get back to the topic. But pre-1990s, Microsoft spent exactly $0 on lobbying. Had no presence in Washington, D.C., no offices in the area. And they were brought in front of Congress and sent it to Arun Hatch, Republican from Utah, lamblasted them for not contributing and for not having an office in D.C. A year later, you can find this stuff on YouTube. A year later, the Justice Fund goes after them. So guess how much they spent today on what? They have, first of all, they have a beautiful Washington office. Not far from the Capitol. Glass, walls, it's just gorgeous place. And then they spent tens of millions of dollars a year lobbying.  Sure, once you get into that slippy slope, there's no any. But let's remember what starts this is the fact that the government has the power to cause these businesses, to regulate them, to control them. And I'm not excusing many of these businesses. But if we're gonna attack anybody, I think we need to attack it at the source, at the source point. It's a government that grants protectionism to certain industries. But that's not what protectionism. And it regulates it. It shouldn't regulate it. In my view, in Iron Man's view, we should have a separation of state from economics. The state should have no wall in economics. They should have no wall in voluntary transactions between two consenting adults. What is, we've only got a few minutes left. What is the role of government? There are externalities, and doesn't government have a role to make sure that people aren't dumping acid into our drinking water? Sure, so the wall, the wall of government, I don't like call it externalities, but the role of government is to protect us from criminals, terrorists, foreign invaders, and to arbitrate disputes. And that's it. So somebody pouring cyanide into the air or into my water is attacking me, physically attacking me. And there are plenty of laws on the books without the EPA that adjudicate that, as in civil courts through legislation.   So a lot of the externalities are problems of property rights. If we have property rights, we can solve the problems of externalities. Beyond that, the only role of government is to catch the crooks, catch the fraudsters. It's to arbitrate disputes when we disagree honestly about stuff. There needs to be a system of objective law, and to protect us from foreign invasion, have a military and so on. But that's it. It's to protect individual rights, or to put it simpler. It's to protect freedom from coercion. It's to protect my ability to live my life as I see fit, free from my neighbor cursing me, and suddenly free from the government cursing me. Are you more optimistic about American politics? Are you less? I go back and forth. I'm overall pessimistic as hell, but I see opportunities here in my home state of Colorado where I see we have a path towards bringing liberty to Colorado. So I'm generally pessimistic, and you have to be because you look at the facts. The facts are not good. And particularly if you look at education. I mean, I think everything starts and ends with our schools and our universities, which are overwhelmingly leftist. However, I agree with you. You know, and otherwise, how could I do what I do? I mean, I work- Neither one of us would get up in the morning. Very long days to fight this fight. If I thought it was certain that we lose, I wouldn't do it. I think it's likely that we lose, but I think there's a good chance we won. And Colorado's a good example. I've been coming to Colorado for over 10 years as part of the leadership program of the Rockies and giving other talks that is steamboat and universities and stuff. And then, you know, can I see a difference? I've made, I think so, in small ways. But Colorado's moved over that period. And I think the other people- I believe Colorado is a libertarian, small L, libertarian state. We want people to, we're not social prudes. You do what you want to do.  But we want government out of our lives. The problem is we want them at most, but that's true.  Well, you actually push people. They still want their Medicare. They still want their security. They still want their values on other people. They still want to push their values. We've got a couple of minutes here. Gossip here, okay. Yeah, sure. Let me ask you about the movies. Sure. Now, when Ayn Rand died, she was working on a mini-series for- We have that script. Really? How did the rights for the movies that have been made, the trio of the movies, was that given by- So Ayn Rand left it to Lena Peekoff, who basically inherited everything, and Lena Peekoff, and she told him at the time, she said, sell them, make money. Don't worry, you can't, you won't get script approval. Nobody will give it to you anyway, right? I barely got it for the fountain head. You're not gonna get it. So in 1994, he was approached by a businessman, Johnny Gliloro, to, and you know, he could grow to check. Johnny Gliloro got option on the movies. The option was renewed a couple of times, and then it was just about to expire, and Lena was gonna get the rights back, and by this point, there was a lot of interest in making this movie, and there was a lot of money, and it could have been made. And on Gliloro, two weeks before the option was gonna expire, you know, ran it into production, crammed it through, and the result is an awful movie, and three awful movies that Ayn Rand- I didn't want to have to say this because they were terrible movies. It's true, it's not an issue of opinion. I didn't want to bring you up hard. And the movies are awful. Hopefully at some point, somebody will be able to buy the rights back and make a profit with an edition of Alice's Sugar. I think she deserves better, much better. And I believe the story could be made in a way that visually would work, and as a film would work. It's possible. I just can't imagine Hollywood ever doing it. Well, but it could be, today you do a lot of independent movies, there's people in Hollywood that could do a good job with it. Real fast, people want to learn more. Where do they go? Ayn Rand.org, A-Y-N-R-A-N-D.org. You can also follow me on Twitter, you're on Brooke, follow me on Facebook, wherever you are. I'm so excited to do this, I've wanted to do this for years, thank you, thank you. Tell a friend and we'll see you next week.


Yeah, can everyone see the slides. Yes. Okay, good. All right. So I'm going to, you know, present a paper today, tying in markets with network effects. It's joint with Jail Troy and Doshin, John, who are both attending. So hopefully they can chime in if I'm messing something up, or if they have things to add. And we'll take it from here. So, okay. So I'm going to just start with just a couple of slides just on, on tying. And, you know, I think most of this audience will be familiar with these things, but at least it will make sure we're all on the same page. So, you know, what do I, what do we mean by tying? So tying involves conditioning the sale of one product called tying good on a buyer agreeing to behavior regarding another quote tied product. So tying contracts, you know, can take a couple of different forms. In some cases they're, you know, gets referred to as a tie in, which is really kind of just purchase, you know, require, you know, the sale of the two products together. And that is that if you want to purchase, say product B, you have to buy my product A. And that doesn't, you know, have anything to do directly with what you're doing with other firms products. In contrast, there's also, you know, tying agreements that are referred to as tie outs, which involve not purchasing from a tied product rival. So if you want to buy my A, you have to agree to buy B from a rival B producer. So in essence, a tie out is a tie of an exclusivity provision to the sale of product of a product, say product A. So, you know, in the, there's a very long history, especially, you know, in the US for sure of very harsh treatment of courts under what was known as the leverage theory of tying. And the basic idea in the leverage theory, what and the concern was that a firm that had monopoly power or great deal of market power in one market, say A, might be able to leverage or extend that market power through tying and bundling to another market B, which is competitive or oligopolistic, and thereby monopolize that market. So, you know, the history of this, the intellectual history in the US was very harsh treatment by courts for many years. The Chicago School came along in the fifties and sixties and, you know, basic and critique this with what became known as kind of the one monopoly profit critique. That is that if you, you know, you can't extend, you know, you only have one monopoly power, and you can't use it to gain two monopolies. And, you know, they had, you know, in some sense, I always have thought of it as a real piece of demonstration of how powerful theory can be that, you know, what they had were some very simple competitive, you know, very simple examples and models that, you know, theoretical models, but very simple ones in which they made this point. And, you know, this point ended up being extremely influential. And, you know, what they then did. So basically it was kind of a two-step critique.  In particular, they pointed to the idea that it could be used as a price discrimination device as in, you know, the classic metering story of, you know, IBM and its punch cards for HP and its cartridges. Come the 1980s, you know, came to be a kind of post-Chicago game-theoretic rejuvenation. So papers, you know, paper that I wrote, Jay had a paper as well, Carter and Waldman and others, all put together models that were game theoretic models in which this leverage theory kind of made sense. So, you know, kind of as in talking, just what the basic idea, for example, in my 1990 paper, there was a firm, it was a monopolist of product A that buyers value, and it faced a potential rival in market B. And what the paper showed is that if that firm, firm one, you know, the monopolist in A, could pre-commit to bundling, it could thereby profitably exclude rivals in some cases from market B and monopolize market B. And the basic mechanism was that a commitment to bundling made firm one more aggressive. And, you know, people why? Because it wanted to sell this very valuable product A. Once it committed to bundling, it would be aggressive in selling the bundle. And if there were scale economies in market B, something that the Chicago School had implicitly assumed away, that could lead to the exit of tie of good rivals or block entry of tie of good rivals and thereby change the market structure in the tie of good market. My paper kind of made a point of that, you know, this commitment assumption was important and, you know, showed that without that commitment assumption, you know, tie frequently could not serve as a leverage device. It did have some, you know, a couple of simple examples of where there wasn't pre-commitment, but I never regarded those examples as particularly successful. And, you know, at least that was my sense at the time. And in fact, the literature since then has mainly assumed commitment. And so, you know, in contrast, you know, without commitment tie in the question would be can tying arise, you know, tying can arise as a best response. You know, and we know it can because it can be a useful, bundling can for example be a useful price discrimination device. But, you know, in some sense, you know, as an antitrust story, you know, the effects in those cases you might think of as that is yes, I'm tying, you know, it's a useful price discrimination device. Yes, it could have effects on rivals, but that's not why I'm doing it. I'm just doing it because it's a more effective way to raise revenue. And so in this paper, what we have is a leverage theory of tying that doesn't rely on commitment. And in which time is adopted precisely because it can raise the perceived value of the tied product and lower the perceived qualities of tied product rivals. And by doing so, it leads to the monopolization of the tied market. And so that's basically what this paper will put together or puts together. I should mention, you know, one probably the closest paper to ours, and I think certainly the closest is a paper is the Carlton-Waldman paper. So, you know, as I'll say in a moment, our paper and the title already indicates it, you know, relies on there being network effects in the tied good market. And Carlton-Waldman, one of their two models does have network effects in the tied good market. And in that sense, it's similar to ours. What's different with Carlton-Waldman, their model is a model of compliments and perfect compliments. So it's a systems market. And the motivation for tying in their story is to protect the actually the tying market from future entry, you know, to protect that monopoly that you started out with. In contrast, in our paper, it's going to rather than a dynamic story about future entry into the tying market, it's going to be a story kind of going back to that leverage theory that, you know, in fact a one-period model where you're tying and successful, excuse me, and successfully monopolizing the tied good market. Okay. So what are the main ingredients of the model? The main ingredients are going to be two-fold. One is that there's going to be imperfect rent extraction in the tying market. So you have a monopoly in the tying market, but you know, you don't know everything about willingness to pay in that market. And as a result there are information that consumers in the tying market have. And you're going to basically use that and exploit that. The second piece of this is they're going to be, as I said a moment ago, network effects in the competitive quote or, you know, oligopolistic tied market. So the combination of these things is going, what we're going to show is that tying can be a mechanism to leverage that unexploited consumer surplus in the monopoly market to create a quasi-install base advantage in the competitive tied market. So basically you're going to have these consumers who are having information rents, but you're going to end up using, basically by tying you're going to get them to agree to buy your tied good market, your tied good, that's going to then lead to you know, get you the bandwagon going in the tied good market and let you monopolize that market even though you have an inferior good in that market. Okay. And that tying is going to be profitable and it's going to lead to exclusion of efficient rivals. And finally, as I kind of stressed already no pre-commitment is going to be needed to do this. So it's going to be a purely best response mechanism that to engage in tying in this way. I shouldn't say pre-commitment isn't needed, but if you can pre-commit a similar story would apply, it's just you don't need pre-commitment in order to get this strategy to work. I should mention in terms of imperfect rent extraction, there are other papers that focus other papers in this kind of foreclosure and I trust vertical practices literature that focus on unexploited consumer surplus. So for example, bursting had a very early paper on tying in which consumers had multi-unit demands for goods and for goods and the multi-unit demands, but pricing was linear. And so basically what his point was, well, you can use pricing time contracts in effect to extract some of the consumer surplus that you can't extract because you with just a linear price. And so in essence, it was basically like a form of Ramsey pricing. That's a mechanism that won't work in our paper because we rule it out by having unit demands in the tying good market. So that's not what's going on in our paper. But Chenzo has a paper that I'm sure many of you are familiar with, very nice paper in the AER, actually one of two papers. The one in the AER is focused on exclusive dealing. It has a similar, you know, it's similarly it points out that you can use information rents to get consumers, buyers to agree to terms. One, you know, there are kind of two differences between that paper and ours. One is that in that, you know, in our paper they're in essence externalities across the buyers because of the network effects. So, you know, in their paper, sometimes, you know, a monopolist can get everybody to just agree to these exclusivity terms for free because they have information rents. But nonetheless, the different types, you know, there's no externality among them. In our paper, there is this externality and what you do is you basically get these high, the high values in market A to agree to your tying contract. That then worsens the quality of the rival in the type good market that's available for other consumers and that's kind of how the bandwagon works. So, you know, that's one difference. The second difference which is related is, you know, in that paper, you know, exclusive dealing in equilibrium ends up being in essence price discrimination device.  So, in a sense, it's kind of and in a sense, it's kind of a price discrimination story again for the use of exclusives. Here, for us as I said, we're going to worst, you know, adoption of time is going to worsen the terms that the rivals that the quality of rivals that's available to consumers in the type good market. Okay. Alright, so what's the plan for the talk? You know, going forward one, I'm going to talk about just a simple example that illustrates the mechanism. It really gives the basic idea of the paper, hopefully effectively. I'm then going to just describe, you know, in you know, without going into the details of proofs, the more general model of independent products that we then generalize the example to. I'm going to just have skipped the complimentary products case in essence. I just have one slide that just tells you what we do for that and then briefly talk about applications. So I guess I have about 25 minutes to do that. Okay. Any questions anyone have that before I get going? Okay. Alright, so here's the example. Pretty simple, you know, pretty simple example. We have, you know, two markets, A and B. A is the tying market. Firm one has a monopoly in A and there are two consumers in this model. There's a low type consumer and there's a high type consumer and the difference between them is the load is in their willingness to pay for product A. So, you know, UH is the high type utility willingness to pay that exceeds the low type consumers willingness to pay, which is UL. In market B, which is the tied market, we have two firms who compete. The two consumers have homogeneous preferences for the two products. There's no heterogeneity among consumers there. There's a standalone value for the two products. That is, by standalone, I mean ignoring any possible network effects. V2 and V1, V2 is the value willingness to pay for product two, which exceeds the value for product one. So, firm two, product B2 is better than product B1. There are also possibly network effects that could be realized and those network effects are such that if both consumers purchase the same product B, each consumer gets an additional value of N as a network benefit. And I'm going to normalize marginal cost to be zero for all the products. Okay. The first assumption, A1 says that two times UL is bigger than UH. And what this basically is saying is that the optimal, if you have independent pricing of A and B, the optimal monopoly price in market A is UL. That is, you'd rather sell, it's more profitable to sell to both consumers at a price of UL than to sell to just the high type consumer at a price of UH. And what that's going to do is it's going to mean that consumer H has information rents. Consumer H receives a surplus of what I'll call S, which is the difference between UH and UL. Okay. Assumption two is that N, the network benefit, is bigger than delta, defining delta here to be the quality difference in market B, V2 minus V1. And so what this says is that there's at least a potential network effects to exceed the quality differential. If you can get everyone on the bandwagon, you actually will have a better product than the rival if you're a perfect one. The third assumption is that this information rent S is large enough. That is, in particular, bigger than two times the network benefit. So it's saying that the unexploited surplus in market A for consumer H can exceed, and by enough, the possible network benefits in market B. And that's going to be what helps us get the band, allows us to get this bandwagon moving. Okay. All right. So let's first talk about what happens with independent pricing. That is, if we don't have time, well, in market A, like I just said, the monopoly price is going to be P, A star equals UL. What about in market B? Well, market B has network effects. There can be multiple Nash equilibria. So throughout the paper, we restrict, we allow consumers to coordinate formally by having their response via coalition proof equilibrium. And that, in the case of these in this example, the consumers in market B have are homogeneous. They have this, you know, the exactly the same preferences. So they're just going to coordinate in their response to whatever the prices are, they will respond to choose their Pareto optimal outcome. And so the, the result of that is that the pricing equilibrium in market B is such that firm two wins, it has the better product, its price, it can charge is exactly Delta, its quality differential. And firm B1 loses, you know, firm one loses and charges a price for B1 equal to zero. All consumers will buy the better quality product and real as a result, their full network effects being realized. Moreover, that network effect is redounding to the benefit of consumers. It's getting competed away because from the standpoint of the competition here the two firms, even though they have different qualities, they are in a similar position with regard to the network benefit and they competed away. Profits end up in this with independent pricing being that firm one's profit is two times UL firm twos is two times Delta the quality differential. Okay, so very straightforward happens with independent pricing. Okay, so now let's think about what happens if you're allowed to bundle what firm one can do. And in particular, what I want to show you is that if we start at this independent pricing equilibrium and allow bundling, that firm one has a profitable deviation to introduce a bundle. And actually introduce a bundle and in fact only offer a bundle. So let me go through that. And that's going to break that will break this independent pricing equilibrium and show you that we're going to end up having bundling happening. Okay, so let's consider firm one to introduce a bundle of A and B one at a price equal to its old monopoly, what the single market A monopoly price would have been namely UL. So imagine we're in this independent pricing equilibrium from one's losing in market B setting a price of zero from one in market A is charging this monopoly price equal to UL. It suddenly deviates, gets rid of its independent pricing introduces a bundle that's priced at UL. Okay, so the first point is if it does this, it's going to be a dominant strategy for consume under the assumptions I've made for consumer age to purchase the bundle to agree to purchase the bundle. And when I say a dominant strategy, what I'm going to show you in this next inequality is even if the price of product B two were zero and consumer and consumer age assumes that consumer L bought B two. So the bundle wasn't going to have any network benefits. It would still be worthwhile for consumer age to agree. Okay, so what's the inequality the left side here is the value of B two is zero when you have no network benefits by doing so which is UH plus V one minus the price of the bundle capital P which will be as I said up here is equal to UL is bigger than the value of buying B two and value buying B two is first the standalone value V two plus the network benefit end. Okay, well I just rewrite that condition that condition is equivalent to saying that S the surplus that type H gets from buying in market A UH minus UL is bigger than delta plus N. But the assumptions we can prove today that N is bigger than delta so two N is bigger than the right hand side and as well we assumed in assumption three that S is bigger than two N. So this inequality holds and consumer H finds it a dominant strategy to agree. Okay, all right now let's look at consumer L and apply iterative dominance. So given that consumer H is agreeing consumer L's going to purchase the bundle as well. Why? Well on the left hand side of this inequality is the value of buying the bundle which is UL plus V one. V one is the standalone value as well because if consumer L buys the bundle consumer L gets the network benefit end and then pays the bundle price P and on the right hand side of the inequality is the standalone value of buying the bundle of buying B two which is V two and I've assumed the best, the worst possible case for firm one which is that B two is priced at zero. So that inequality is equivalent to the inequality N bigger than delta which is something we've assumed. So once consumer H buys the bundle the bandwagon is started and consumer L is going to buy it as well. Okay, so both consumers by the bundle the price of the bundle is UL so the profit from doing so is two times UL which is exactly the same profit as under independent pricing except notice that these inequalities that we just went through were both strict inequalities and so I could have in fact charged a little more than UL for the bundle and gotten everyone on board and so in fact there's a bundle, a deviation to bundling where you price a little above UL that through iterated dominance is guaranteed to lead to an increase in profit compared to independent pricing. So that's basically the example. Okay, any questions anyone has on that? Okay. I can ask a question on that. I was wondering whether consumers would have a interest in buying both the bundle and oh yeah, perfect. Sorry, finish your question know what it is because with B buying B two they get a better standard value so they could combine that with the getting product rate. Thanks, I meant when I went through this first inequality I meant to say something about that. So yes that is that's an issue so you know what we're assuming here is that you know what you're doing when you bundle is a tie out okay you're explicitly saying you can't buy product B two okay it's not always necessary to do that so for example it is necessary when the costs marginal costs are in fact zero if the marginal costs were actually positive for these products it could be that without the explicit tie out you still would you know a consumer would never have an incentive to buy the bundle in order to just get a and then buy B two but in the case that I've assumed where I've normalized costs to zero you would have an explicit requirements contract a tie out that said you aren't going to buy B two so thanks very much for bringing that up okay model with independent product so I'm just going to hear here I'm just going to kind of give you a sense of the model and the structure of what we the results that we do that we show but the basic idea of that of everything is what I just showed you okay all right so what's the general model from what is a monopoly you are that represents consumers valuations for product a distributed an alpha to alpha plus you upper bar and we're going to define so the lowest possible value for product a is alpha which could be positive a consumers type is going to be defined as the difference between its value and alpha how much above alpha their value is and the distribution of that type is going to be according to a CDFG which has a monotone has a great condition the price of product a well off in the paper we often do a change of variables which states you know kind of a net price above alpha for product a and that lets us write the demand for product a is just one minus G of PA hat which is that next that net price profit maximization is just maximizing PA hat plus alpha that's the total price my times the demand one minus G of PA hat and we get standard first order condition and in some cases if alpha is big enough every the optimal monopoly price will be to sell to everyone which is the quote full coverage case one just quick remark you know in terms of interpretation you can interpret what's going on in market a equivalently as being that product a is a two sided platform and consumers valuations are those types but the platform also is getting advertising revenue of alpha per consumer and if you go back to its objective function you know here profit maximization you can see that that PA hat would be the price to consumers alpha here would be in essence the revenue earned per consumer or equivalently a negative marginal cost okay the tide market firms one and two compete consumers again at homogeneous valuations there's a standalone value VI and network benefits which are beta times NI where NI is the total number of consumers who use VI V2 is bigger than V1 so assumption one again delta is the quality differential that's positive beta is bigger than delta which is an assumption that like our previous assumption that network effects are important enough and there's a stability condition that we're assuming as well okay independent pricing game just as before there's a monopoly price PA star that now need not involve full coverage it could have just some consumers being you know being excluded in market pay and then again applying coalition proofness the equilibrium market be with independent pricing is that firm be firm to wins and charges its quality differential so in the general model we then you know and that analyze time we now say well suppose firm one is allowed to tie what's the effect of that we introduce assumption to here which is a condition that is a sufficient condition for the you know ban for this monopolization effect of time to go through and it's basically saying you know it more likely to hold if alpha is is large it's also more likely to hold if delta over beta over delta is large so if the network effect is much more important than the quality differential it's more likely to hold and it always holds if we have full coverage in market anyway I won't go and show you that but in the paper we point that out okay so first thing that we show is that you can effectively in this setting you know for firm one without some generality you can just think of firm one is either optimally best responding with an independent pricing or alternatively optimally responding with a bond with tying it's effectively a tying contract where it only offers a bundle at price capital P and product be one at a price P be one but it doesn't offer product a separately this figure kind of just gives you the idea of why this is true so this what I've done in this figure is arrayed consumers according to their type from left to right and I'm depicting a situation here where the bundle price P capital P is less than the sum of PA and PB one so that's why P minus PB one is to the left of PA so if you think about consumers types here you know consumers in set one are either going to buy B1 or B2 they're not going to buy the bundle because the incremental relative to buying B1 the incremental cost of going to the bundle which gives you product A is above of their types and so they're either going to buy B1 or B2 set two is either going to buy the bundle or B2 because for them buying the bundle is worthwhile the incremental cost of the bundle is bigger than the price differential relative and then finally in set three you're either going to a consumer there is either going to buy the bundle or a combination of A and B2 and the reason is their utility from A set price sold separately their utility from A is bigger than the price of A sold separately so if they buy B2 they're also going to buy A separately from the monopolist and so one you can see here is the only consumers who are going to buy just A by itself are in set three and if the the firm is in fact selling A separately at all what you can see here is that B you know it's doing so because A the AB2 combination is better than the bundle okay well if that's true it's also true that for set two B2 is better than the bundle and for set one B2 is better than just B1 and so that tells you that in that case the only sales that firm one is making are sales of product you know are sales of product A at three but if that's true the firm would be better off doing independent pricing and so you know weekly better off and so that's kind of how we see that one of these two things is going to be the best response is going to be a best response okay so that's a first thing we show the second thing we show is a similar result to the example so in the example we show that there was a deviation to bundling that breaks the independent pricing equilibrium we do the same thing in the general model in the general model what we do is we show that introducing deviating to just having a bundle that basically gets exactly the same set of consumers who would have been buying product A to buy the bundle is a profit increasing deviation and this is just the condition of what the bundle price would be which is the condition that says that a consumer whose type is exactly PA at star the net optimal monopoly price in market A with independent pricing that that type of consumer would be indifferent if everyone who had a higher value for product A bought the bundle and everyone's a lower value for product A to bought B2 and importantly the argument here is exactly as well an iterated dominance argument that is that we start at the top with the highest valuation consumers and they are for sure going to buy this bundle at this price that I've just described and then the bandwagon starts and everybody with a type all of the types that I've just said will buy the bundle will do so you know through a process of iterated deletion of dominance of iterated strategies so like the example that just shows you that independent pricing equilibrium is broken the neither the example nor this result tells you what the equilibrium actually is and so our main proposition which is a morass of words on this slide I apologize for that is basically telling you what the equilibrium is there are two cases case one says if alpha plus beta is bigger than one over G of zero then in that case the equilibrium is that firm one in fact only sells a bundle in equilibrium and it does so at a price of alpha plus beta minus delta it sells it to everyone so there's full coverage in terms of sales of the bundle and in doing so of course it monopolizes market B the second case is and that case I should say always holds when we have full coverage with independent pricing in market A the second case is a case is you know the converse case and in that case firm one actually sells both a bundle and product B one separately and so it sells the bundle to high enough value consumers in particular consumers who have a type above some critical type what I've called here X till the star which is given by equation one and it sells B one to lower value consumers and again it monopolizes market B so that's the main result let me take a few minutes to finish the rest of this so welfare can in principle can in general be ambiguous monopolization of market B is inefficient that's why you know because it's monopolizing a market where it's the less valuable product but in that second case I just described we also get an expansion of consumption in market A and that increases the inefficiency of market B however in the first case where we had full coverage in market A to start with we know that in fact in that case we get full we continue to get full coverage there isn't any expansion in market A so in that case we know that the result of the time is inefficient the slide on compliments is also just literally one sentence which is here what we do is we show that if you have an inferior product A then everything I just showed you for independent products actually ends up yielding we get the same thing with the case of compliments you know an A B system but where there's a less good product A than the monopolist and you can just think of the less good product like it you know before there was monopoly in product A but you could decide not to buy now instead you could decide to buy this inferior product so that's how the compliment case works in the paper potential applications so in the paper we just we talked about you know two cases that where the model can at least shed some light I think on this on the situation so one is the EU Google and Android case so in that case you know Google was found was accused and found guilty of tying the play store to search so another there was a the moda contract mobile application distribution agreement contract which required that distributors of mobile mobile carriers for example and putting Android mobile carriers I should say in order to get access to the play store where Google had tremendous amount has a tremendous amount of market power had to agree to make Google the exclusive out-of-the-box search engine on the phones there are definitely differences from the model to that situation and that that situation that just you know we have distributors not single product consumers for example but one thing I think is interesting about this is when you think about the moda you know you might ask yourself like why did Google tie the play store in order to get search exclusivity as opposed to just paying for exclusivity right and so you know potentially the model gives you some explanation for why those two things are different okay that you know if you just pay you're not taking advantage of these unexploited unexploited surplus a second example and you know the network effect in that case is that search you know arguably has evidence for I won't go say too much about this but you know search is a product where there are network effect direct network effects the more people are searching on a search engine the better the quality of the search engine will be in the EU Microsoft case Microsoft was had tied the windows media player to windows and windows media player has indirect network effects in that application the more people have the media player the more applications are written that are compatible with the media player okay so conclusion just we had a leverage theory of tying in the presence of network effects in the tied product market tying enables the leverage of an exploited consumer surplus in the monopolized product to build a quasi install base advantage in the tied product market and tying in these circumstances can be profitable without any commitment and in particular what it does is it raises by starting this bandwagon it raises the perceived quality of the tied product and lowers the perceived quality of tied product rights so thanks very much sorry for going a little bit long I will unshare first of all I would like to thank the organizers for letting me and discuss this very nice paper I learned a lot by by starting this paper it's a great contribution to the time I must say that as far as I can tell the analytics is fine so in my discussion I will focus on the ideas underlying this this paper and the basic mechanism as Mike explained is based on the notion of an exploited consumer surplus so the idea is that for some reason dominant thermo monopolies cannot extract all the surplus from consumers in the market and therefore that creates scope for imposing contract restrictions in other markets or related restrictions that that may be profitable now when you want to tell a story which is based on this unexploited consumer surplus idea you have to address two key questions there are two key elements in any such story the first one you have to explain why the dominant thermo cannot extract fully the surplus from consumers and this in these time models is relatively simple as I will tell in a moment in other applications like for example exclusive dealing is more tricky is exactly what is the mechanism whereby you can leverage this exploited surplus to raise your profit so just to illustrate these two paths of this type of explanations let me contrast this paper with very early people by best thing which Mike also mentioned was actually the first to put forward this type of unexploited consumer surplus mechanism so there are differences in both aspects so based on as a model where consumers have variable demand and the reasons why the dominant firm cannot extract the surplus fully is that the dominant firm is restricted to linear pricing here instead we have a model with discrete demand so linear pricing is not restricted per se but what you assume basically is that the dominant firm cannot price discriminate perfectly so in this aspect I would say the differences are minor with Burstyn the most important differences in my opinion are in the way in which these unexploited consumer surplus is leveraged in market B because what Burstyn has is basically a model similar to a model of optimal taxation so the idea is that by tying the dominant firm can touch with the Burstyn price cost margin two goods or n goods instead of one and we know that touching more goods tends to be more efficient so it is basically kind of exploitative abuse which if I understand correctly in the US would be not able to say no abuse whereas in this paper what we have is that a more efficient competitor is affected because it is denied the scale which create which allow it to exploit the network externalities so having said this I have two comments the first one is I was wondering whether there may be other exclusionary stories like this but stories that are not based on the notion of network externality so I think for example of a setting which is often considered in the exclusion of dealing literature and precisely models of naked exclusion so the support that a competitor in market B is a potential entrant which overall that is even accounting for the entry cost could be more efficient than the dominant firm in market B but the idea is that by tying you can exploit the dominant firm can exploit the unexploited surplus basically to deny economies of scale to the competitor and to deny the entry so I was wondering given that you have given important contributions also to the theory of naked exclusion whether you consider this particular this twist it would be another application of the similar the same idea and the second comment is about this notion of unexploited surplus I think it's important to clarify that it has not been taken literally that it is not strictly necessary that consumers have positive rents what really matters is that the dominant firm cannot extract the rents efficiently so to to clarify because if the dominant firm cannot extract the rent efficiently then that means that the dominant firm can give up a euro of profits so and that would lead to the consumer more than one euro of surplus and then the dominant firm could use this more than one euro of surplus in the other market so for example think of this kind of situation in market A so this is a situation where your assumption would be violated because the optimal price would be 201 as in your example one consumer of type H and one consumer of type low low willingness to pay monopoly price would be 201 no unexploited surplus left but clearly you see that here if the dominant firm price at 100 it would lose one euro of profit but it will lead to consumer H which is 101 euro of rent and then it could exploit such rent in market B and it could be that that kind of exploit so large a rent could be exploited to gain more than one euro of profit and if I understand correctly this is what is actually happening in your model in the case of mixed bundling so when you'll notice that there are two conditions with one condition the market is covered in the other condition with independent products the market will not be covered and in that case what you have is that in equilibrium there is mixed bundling but I mean mixed bundling because the market A is not covered is quite mechanical effect to me what is more interesting of this case is that the price of product A actually goes down of course when I say this I'm saying something loose because it's not priced independently but if you define the price of product A as the difference between the price of the bundle and the price of product B that goes down compared to the case of independent products and the reason if I understand correctly is precisely this one that is with uncovered market the way rents are extracted is inefficient so the dominant firm may want to decrease a little bit or decrease the price of product A that creates at least more rent to the consumers and then the dominant firm can exploit these rents in the market for product B whereas if instead the market is covered and you reduce the price of product A that will transfer rents to the consumers on a one-to-one basis and of course you cannot profit from this because you cannot extract on a more than one-to-one basis in the market for product B so the point is more general this is an exploited surface mechanism is more general in my opinion you may tell a story like this whenever the pricing in the tying good market is inefficient it doesn't allow to extract rent in an efficient way thank you


What is poppin' people, welcome back to another video. Thank you guys so much for the support if you're new to the channel. Please hit that subscribe button, hit the notification bell and also hit the like button if you guys have been enjoying the content. I got a couple things to talk about today and we got another giveaway for you guys and the giveaway winner because I actually forget because I haven't ran a giveaway in a couple weeks and I saw some comments about it, I was like, oh my gosh, I did not announce the last giveaway winner. So let's go ahead and hop into this. First, I guess this is something I needed to talk about. I actually injured my left hand, I don't know if I told you guys. My nerve actually goes down my arm from my neck where I have an injury all the way down to my thumb and my index finger and pretty much this hand right now is a floppy arm. I can't open the doors with it, I can't even open a water bottle, I can't really do anything with it. I've tried to fish the last couple of days but it just wasn't working. So I'm recovering from this injury. I'm hoping I'm gonna be back in the game very, very soon. But in today's video, we have a re-upload. That is why if you guys are curious, it's a video that YouTube didn't push the notification so you guys probably haven't seen it anyways it's a freaking banger. If you guys wanna enter this giveaway, we got a fishing reel right here. All you have to do is be subscribed to the channel, hit the notification bell and also hit the like button and leave some comments down below on some video ideas. I already gave away one of these, I had like a box of them and I just need to get rid of them. As you guys can tell, this one's legit brand new with the packaging still on it. So make sure you enter down below. For the last giveaway winner, I'll pop up your name on the screen right here. Be sure to DM me on my personal Instagram, add Noah Pesquetelli and I'll get the package out to you guys. So we're gonna go ahead and hop into this video today. It's gonna be a banger, I hope you guys love it. Some big swim bait action, some good fish. Let's hop right into it. He was right there man, he was only about a time. Look, he's right there. See him behind it? Oh yeah, yeah, I did see him. I think there's two. Can you see this? Oh my God, there's like, dude, there's like 10 birds. There's like 10 birds, dude. That one almost smoked it. Dude, that was so big. Did you see that on the camera? I think so. I don't know if you could see the fish or not, but there was literally like 10 bass right here. They're right outside of, I don't know if y'all can see these, but they're just right outside this rock line and they're just swimming around. Maybe we shouldn't have walked on this. I know. They're not scared, that's for sure. I think we want to trigger off on every toilet I'm feeling right now. Yeah, I keep seeing them swimming in and out a little bit. I know. Guys, that was one of the craziest things. I'm praying that you guys saw that on camera. There was just like five fish. One of them was so big and just nosed right up to this. He had to have been probably like five pounds. We're going to try to cast on this other side. Let's attach this to the other lake and see if we can catch one really quick. I don't want to walk up on it because that was our mess up over there. So we're just going to pitch it off. I was reeling it like medium, then pausing it and twitching it. And they were hitting on the pause or the twitch. I hope everybody's having an amazing day today. We're going to be chucking some cool looking swim baits for some giant bass. I actually got my boy Fletcher behind the camera. If you guys are new to the channel, please hit that subscribe button. Hit the notification bell, also hit the like button. And if you'd like to check out Fletcher's channel, feel free to do so. But look at this freaking swim bait right there. Fletcher's been a nice guy. He's letting me borrow it and try it out. I mean, just looks like a baby bluegill right there. It's got some chartreuse on the head. It's just a big mixture of colors and this thing is looking sweet. We're going to, I'm going to catch you guys on the water and we're actually going to run it next to the boat. I just kind of want to see how it runs. And then we're going to catch some massive fish on it. If you guys have any swim bait suggestions, leave them down below. Cause I was talking to Fletcher and I was like, I kind of want to make a swim bait series and go through just a ton of, you know, crazy baits like that. But yeah, let me know if you guys want to see some more swim bait videos. Also leave the comments down below. Let's go ahead and hop on the water. See if we can catch them. As Fletcher, if I could throw this today and he was like, sure. So we're going to have a lot of fun. Moken it too. They've been, yeah. He said he's been, he, he filmed the video. I think when Adam was with him, he caught a ton on it. So we're going to give it a shot today. I have this on my Pro-Ti, just rigged up 20 pound fluoro on here, brand new. Cause the last thing I want to do is snap off Fletcher's brand new swim bait. So we're going to go ahead and get it started. We're fishing some clear water today. Hopefully get on some big bass.  Ooh. Ooh. Did you get a hit? I watched him open his mouth for it right there. That was like a three pounder. I think there was two. I watched him like right when I paused it, he just like opened his mouth and like never committed to it. Well, that was the first little sign today, guys. Had a follower. We are all aboard the ship and ready to catch them on this juicy looking swim bait. Don't forget it. Oh my gosh. So close one folks. There's beds right there, by the way. When we came out here that day, Adam saw so many on this tree. Really? So many on this tree, homie. Watch me just ride away first cast. I'd just be like, what? We spent like five hours on this thing. First cast. Oh yeah. Like it took me a while.  And, oh my God. Oh my God. Yep. Oh, there we go. No way. Right away. See, this water is a lot better than the last one. All right, Fletcher. That's okay. That's okay. You left your camera. You know. What kind of YouTuber are you, Fletcher? You just leave your camera. All right, I'm excited that. I don't want to hear it. The amount of times you've left your camera and your batteries. That's true. That's true. How long have you been doing YouTube? I know. Thank you. I know, man. I've messed up quite a bit. It was like a four. It was like a four. Yeah, there's like a ton of beds. This is what Adam was saying when we came. Maybe I can get in the bite. All right, I feel better now. Like I had one eat that very quick in here. I think it was just the water in that other place. Oh no. Dude, my hand released right when I saw them. I was like, yeah, this is not. What if I just beam that thing, dude? Just straight up. Wow. Just pulling my drag up into the air, birds just flying off. Oh, there's some bed right there. About a foot past where I just casted. There's a bass on bed. I saw his tail move. He's not big, but let me see if I can get it. Yep, he's up there guarding. Watch this. If I can get this cast right, I should be able to catch one. What? You had one? Yeah. Yeah, they got like, Oh, yep, they came back. They came back. Came back. There we go, guys. Smoking them on the hill.  Oh! I thought you said he wasn't small. I thought he, or I thought he was small. That's what I meant. Dude, it hit the water and he freaking went boom. Four bites. Oh my God. Dude, what are, why can't I get this hook to stay pinned? That was like a four pounder. I know. Oh my God. Jesus. I don't know if you all heard that, but that was just a rip on the second. I think that's a lucky ripper, dude. The lucky dipper. The lucky ripper. The lucky ripper, dude. I just got to get the lucky ripper every once in a while. Jesus, man.  How big was that one? About three and a half. They're really, they're really trying to irritate me right now, man. There it is. Got one? Yep. There you go. He ain't big, but I got him.  Look, look at the one right behind them. Is he still there? No. Oh my God, there's another fish with them. Better get that fish in the boat, boy. There's a fish with this guy, too. He's a little bit bigger than him. All right. Got you that time, baby. Look at my line twirl, bro. Geez. Look at that. What in the world? All kinds of funky stuff going on. I'm just happy I freaking caught this fish, bro. He ain't much. Guys, we've lost so much. We've had so many good followers, but to finally get one in the boat is the best feeling in the world. He's not big by any means. He's just about a pound, but just beautiful colors on that fish. And he's living in this, you know, clear water right here. Beautiful bass. We're gonna get him right back in, cast back in there, see if we can catch another one. We've had a rough time having this couple of fish come off, especially that second one, me, whoo. As he talks about a rough time, me and, uh, me and Fletcher were talking about that second one is the second one. Fletcher, we're talking about that second one is every bit of three and a half. That freaking irritates me, but we're gonna keep on putting our heads down, catch some more. Yeah, there's like a two pounder with that fish, bro. I think there's some beds right there. Yeah. I might catch another one right here. Yep. Oh, oh, oh. Look, look, look at that. There's another one with them. Dude, they're here. We just gotta stay off the spot. He's not a bad one. Oh, stay down, baby. Stay down. Stay pinned. This next cast, guys. They're here. There's more here too. Some freaking beds on the bed. Oh my God. Oh, no, what's there? She's barely hooked. Oh my God. There you go. Yes, sir. This is finally what I needed so bad, guys. On that freaking sweet swim bait, next cast, we found them stacked up right here. That's an easy two and a half right there. Oh, this beautiful fish. That's, now we're talking. Like I said, not a giant. Just look at the markings on this fish. It's so pretty. We're gonna get him right back. We're gonna try to get three casts in a row. But look at that beautiful one.  Oh, you've had the butterfingers. Today is just, today's one of those days, bro. Here, you wanna keep the camera rolling? See if I can get one more right now. Yeah.  There's so many fish. They were like trying to steal it out of each other's mouth. I don't know if they're dumb enough to keep it. I think there's some more. I saw some. See that bed behind us? Yeah, yeah. Oh my God. There is a lot right there. But even that one, there was fish trying to steal it out of his mouth. Sling it all the way up under that tree line right there. There was some like, move in the water. Oh, that's a perfect cast, dude. Dude, come on. We finally found a stack of them. It's crazy. Sling it up under that tree line. Oh, you saw a movement under that? Yeah, yeah. I'll put you in that one right there. No, no, no, no. Yeah, all the way up there. So you saw a move under that? Yeah. I got you. I got you. Yeah. All that weight right there is almost becoming worth it when you catch them like that. About all that time in the world, you guys know how fishing goes. It's so crazy because your day can change and just a snap. Just like that, you know, we had no fish caught two back to back cast. So I just got to keep fishing, stay confident, keep your head down, keep throwing the right bait.  That was about a three pounder, too. Dude, that's so aggravating to me, man. I just... I think they really got a thread on a more flexible one. I didn't feel him hit it, he just loaded up on it. That was a freaking good one. Every good one's came off.  And I mean, at least we've got to see the fish. I hope the gover can see it, but that was every bit of three pounds.  You're about to get slammed. Yep. That's him. I bet you that's the one feeding. You are not jumping, I ain't allowed. I'm curious. Oh, that's a good fish. Pretty fish. Healthy, healthy fish. Oh my God. Oh, God. Look at that.   Look at that. On that freaking pretty swim bait right there. Look at the bass colors on that thing. He is a thick, chunky guy. That's exactly what we needed right there, Fletcher. Well, guys, that is a beautiful fish right there. There's pretty markings on him. We're gonna release them on this side. I'm gonna throw another cast in there. Seems as if all the fish we're getting is like back to back, so. See you later, girl. God, that is a pretty fish. To catch like two or three for Lucky. There he is. You got him? Small one. Look at him running sideways. Dude, look how small he is. Are you kidding me? Look at this.  I mean, it's not like this thing's huge, but still. Is that not crazy? Look at the colors on that fish, bro. It's awesome. Look at him pissing. Look at that. Just beautiful colors on the fish and the bait obviously just has an awesome paint job on it. I love that color on that bait. Where's your pliers, Tommy? I absolutely love this. Fletcher, did you see? I feel like people would like to hear this too. Was there like other colors of this that were really cool? Yeah, there was another bluegill color. I think that one was called like Wild Gill. There was a thing, one just called Gill. Yeah. And that was like a more natural looking one. Uh-huh. I'll put that back. There was one that was kind of like shad color and then something else. I really like this one. I like the chartreuse on it. Yeah, I know. I love that one. It adds like a really good, really good look to the bait. I dig it. I dig. I'm a big fan. Subscribe to this boy over here. What's up? Kicking their bass TV. You know what's up. And if you feel like it, you can go ahead and drop a like and a comment, but those are not. There he is. Oh, and no one's got a fish. He's barely hooked. And that's a good one. Yeah, y'all better go subscribe to this boy too. Dude, don't come off.  He's barely hooked. Get that net. Actually, just grab him for me. Just grab him. Yeah, just grab him. You can get a lip him in the mouth. He's not bad. Grab that sucker for me, Fletch. Yes. There you go, boy. Finally. Guys, you have no idea how long I've been waiting on that bite. That is a solid three number. I was so scared he was going to spit it, but this hook has him good. Look at that. It just had one part of that treble. Look at that.  Not like that was going to do anything, but that is a beautiful fish. I think it's a three pounder. You want to get a weight on him? Yeah, we can definitely get a weight on this big, beautiful girl. That is a nice fish.  A pretty one for sure. These three pounds, probably right on the money. What do you think, Fletcher, right on three? I'm thinking right at three. Like three, one, three, two. All I went down, it was saying three exactly, and now it's at two, nine, five. I mean, he's pretty much right at three, three pounder. Hey, aren't y'all have y'all can read the scale, though? I know, right? Yeah, we haven't said that, Fletcher. Freaking wing, got him out. I might need to order me one, too. What is this called? Catch commander? Yeah. Catch commander scale. It's like a tournament scale. I kind of like it, yeah, I like that. It's a lot easier, too. But that is a beautiful fish, three pounder on the swim bait.  That is just a football, beautiful pancake right there. Let's get her right back in the water. A lot of beautiful, there she goes.