The Georgetown Center for Business and Public Policy

August 2009 - Georgetown Center Executive Director John Mayo has published an Economic Policy Vignette "Policymaking in the Wireless Telephone Industry: Let's Avoid the Rorschach Approach." 

Dr. Mayo's piece begins "The Rorschach test is a well known tool for psychological evaluation. In the standard Rorschach test a subject is asked what he or she sees in an ambiguous ink blot on a piece of paper. Unconstrained by context, the subject is free to interpret the ink blot as a giraffe, a tree, an airplane, the boogie man, or anything else. In recent weeks, some policymakers have, in Rorschach fashion, taken to seeing “market failures”, “price increases” and “barriers to competition” in the wireless telecommunications industry. Concerns include a nominal price increase on the de minimus portion of text messages that are not purchased with a bundled pricing plan and the exclusivity of certain handsets by wireless carriers. From these fragments of information, policymakers see the boogie man of competitive failure in the wireless industry. Unlike a Rorschach test, however, evaluation of the state of competition in the wireless industry is not, or should not be, an unconstrained exercise in which policymakers are free to imagine failures of competition from ink blots. Rather, an evaluation of the performance of this, or any, industry must be disciplined by both economic analysis and the empirical facts."

To read more, please click here. 

This peice is one in a series of papers published by the Georgetown Center under the heading of Economic Policy Vignettes.  To see more of the vignettes, please click here.