🧵 Here's a short article published last year discussing some of the policy implications of the debate about #lootboxes in gaming. Basically, the case for regulation is non-existent, even setting aside the rights issues involved. papers.ssrn.com/sol3/papers.cf…
The burden of proof is on regulators to show that (1) loot boxes cause serious harm, (2) the game industry can't deal with that harm on its own, and (3) regulation won't produce more costs than benefits, and/or unintended consequences.
None of the three points has yet been demonstrated, and in fact, the evidence points the other way. Only (1) is even being studied, and most of the papers about it are little more than politically-motivated junk science.
And because basically none of the people studying loot boxes are economists, there's virtually no recognition that regulating gaming will produce unintended consequences, and will likely make things even worse than the (alleged) orignal problem.
In fact, because regulation is a classic case of "raising competitors' costs," regulating loot boxes will likely have the perverse effect of helping companies like EA by hurting their smaller indie competitors.

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More from @mattcmccaffrey

29 May
@SSRN reminds me that this paper has been getting more attention lately. In it, I argue that William Baumol's idea of unproductive entrepreneurship would benefit from the more Austrian, judgment-based view rather than focusing only on innovation. papers.ssrn.com/sol3/papers.cf…
Baumol argued that entrepreneurship in the sense of innovative behavior isn't always a good thing: instead, institutions set the "rules of the game" and the relative payoffs to different kinds of entrepreneurship.
So institutions determine what kind of entrepreneurship we get: innovative service to consumers, or innovative organized crime, or innovative cronyism between business and government.
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