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Why the iPhone Won't Last Forever and What the Government Should Do to Promote its Successor

30 Pages Posted: 23 Sep 2009 Last revised: 11 Oct 2009

Robert W. Hahn

University of Oxford, Smith School; Georgetown University

Hal J. Singer

Economists Incorporated

Date Written: September 1, 2009

Abstract

Because of the overwhelming, positive response to the iPhone as compared to other smart phones, exclusive agreements between handset makers and wireless carriers have come under increasing scrutiny by regulators and lawmakers. In this paper, we document the myriad revolutions that have occurred in the mobile handset market over the past twenty years. Although casual observers have often claimed that a particular innovation was here to stay, they commonly are proven wrong by unforeseen developments in this fast-changing marketplace. We argue that exclusive agreements can play an important role in helping to ensure that another must-have device will soon come along that will supplant the iPhone, and generate large benefits for consumers. These agreements, which encourage risk taking, increase choice, and frequently lower prices, should be applauded by the government. In contrast, government regulation that would require forced sharing of a successful break-through technology is likely to stifle innovation and hurt consumer welfare.

Suggested Citation

Hahn, Robert W. and Singer, Hal J., Why the iPhone Won't Last Forever and What the Government Should Do to Promote its Successor (September 1, 2009). Available at SSRN: https://ssrn.com/abstract=1477042 or http://dx.doi.org/10.2139/ssrn.1477042

Robert W. Hahn

University of Oxford, Smith School ( email )

Oxford
United Kingdom

Georgetown University

Georgetown Center for Business and Public Policy
Washington, DC 20057
United States

Hal J. Singer (Contact Author)

Economists Incorporated ( email )

2121 K Street N.W.
Suite 1100
Washington, DC 20037
United States
202-747-3520 (Phone)

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