Case Studies

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In 2015-16, the George J. Stigler Center for the Study of the Economy and the State began work on seven new case studies, four of which have already reached the final draft stage. We will post PDF files of these cases online for download soon.


Cumplo

Theme: How regulation is used to prevent entry, especially in developing countries.

Cumplo is a peer-to-peer lender that broke into the oligopolistic world of consumer-financing in Chile. The incumbents pressured the regulator to criminally indict Cumplo for violation of the banking law. The founders were able to fend off this attack by promoting their image in the local and international press. Cumplo is now poised to become the main peer-to-peer lending platform in Latin America.

Suitable Courses: entrepreneurship, strategy, media, political economy.

Bigger picture: case illustrates how new business models, which challenge powerful incumbent industries, need to adopt a media strategy parallel to their business strategy.

Mediapart

Theme: Bucking the trend in the media industry

Most notably, it manages to break even and make profits solely on subscribers’ revenues; it gets the French people to pay for online content; and it produces long-form investigative journalism and not just click-bait. What are the drivers of this seeming success story?

Suitable Courses: entrepreneurship, strategy, media.

Bigger picture: It is both an example of successful entrepreneurship in a very difficult industry and an alternative business model for investigative journalism.

The Pharmaceutical Challenge

Theme: Can the profit motive solve regulatory problems?

The pharmaceutical industry’s business model is predicated not just on R&D and a quality pipeline, but also on their marketing, legal, and regulatory departments prolonging intellectual property privileges. We examine the story of hedge fund activist Kyle Bass, who thought he could make money by betting against bad patents. Based on merit alone, Bass seemed to have a case: the pharmaceutical companies he targeted were indeed enjoying too much protection without producing innovation in healthcare. In other words, Bass targeted companies that were engaging in “life-cycle management” meant to prevent reaching the “patent cliff” – practices that are good for the company but bad for society at large. But as Bass found out, the patent system is not necessarily merits-based. It is rather extremely tough to bet against big pharma’s ability to affect the rules of the game.

Suitable Courses: The case will appeal primarily to healthcare and intellectual-property related courses, as well as to regulation and political economy ones.

Bigger picture: fleshes out how companies compete over who tweak the rules of the game better rather than who provides better products/services. These dynamics and their normative implications are more pronounced in the pharmaceutical industry, where the perceived purpose should be making patients’ lives better, healthier.

Disney

Theme: How much of the Disney Company’s business model is riding on its ability to change US copyright laws?

When MBA students discuss Disney, it is usually within contexts such as vertical integration, creativity and the like. But a large part of Disney’s revenues depend on constantly extending the copyright protections it enjoys. This is why every time that the copyright over Mickey Mouse is about to expire, Disney lobbies heavily–and successfully–to change federal laws and extend (retroactively!) the protection it enjoys. The Mickey Mouse case illustrates how policies meant to incentivize innovation can be co-opted to stifle it.

Suitable Courses: the case appeals to courses on business strategy, entertainment industry, and intellectual property, as well as regulation and political economy.

Bigger picture: raises issues of intellectual property protection–how much is too much from a societal perspective? And who gets to dictate the answers?

TheMarker

Theme: Can a newspaper be a tribune of the people? Should it?

The Israel-based business magazine-turned newspaper TheMarker adopted an agenda of fighting against economic and political concentration. The paper’s active, constant campaign led to unprecedented socio-economic social protests, which were later translated into unprecedented legislation meant to reduce economic concentration. But at what cost to the media company? And at what benefit to society? TheMarker and its “parent,” Haaretz, suffered from an advertising boycott as a result of their activism. And the real impact of the concentration reform remains to be seen: the reform may die slowly in its implementation stage without actually improving the economy. The change may be short-lived and simply a congruence of events rather than a seismic shift.

Suitable Courses: The case is meant primarily for media-related courses. It can also appeal to macroeconomics and anti-trust related courses, as well as political economy and regulation.

Bigger picture: The case spotlights two types of big picture insights: one set of insights deals with what shapes regulation (public opinion and perception); the second deals with reputational concerns at the media level: can a media outlet create, maintain, and profit from having a reputation for representing the dispersed public?

Piraeus

Theme: How banking regulators benefit banks

In the middle of the Cyprus solvency crisis the Greek bank of Piraeus received a large windfall in the form of Greek branches of a Cypriot bank. A tour behind the scenes reveals just how much thought and resources were invested in assuring that the public would finance this gift to Piraeus: advertising, charitable contributions, and personal connections.

Suitable Courses: Finance/banking, macroeconomics, media.

Bigger picture: fleshes out EU politics, and general “soft capture” dynamics: advertising as lobbying, corporate philanthropy as co-optation, and so forth.

Clarin

Theme: How much power is too much power when it comes to media?

The Argentinian media company Clarin is extremely powerful. Traditionally, Clarin served as the clearinghouse and facilitator of rent-seeking activities in Argentina. But once the new political regime executed a concerted effort to capture the media, the all-powerful Clarin became a valuable check on government power.

Suitable Courses: media, policy, macroeconomics.

Bigger picture: The case emphasizes the political role of the media, and how it is connected to the business model of media groups.


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