CALTECH EC 106 - THE OBERHOLZER-GEE/STRUMPF FIE_SHARING (20 pages)

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THE OBERHOLZER-GEE/STRUMPF FIE_SHARING



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THE OBERHOLZER-GEE/STRUMPF FIE_SHARING

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Pages:
20
School:
California Institute of Technology
Course:
Ec 106 - Topics In Applied Industrial Organization

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The attached material is posted on regulation2point0 org with permission THE OBERHOLZER GEE STRUMPF FILE SHARI G I STRUME T FAILS THE LAUGH TEST STA J LIEBOWITZ SCHOOL OF MA AGEME T U IVERSITY OF TEXAS AT DALLAS MAY 2010 I examine the key instrument German kids on vacation used by Professors Oberholzer Gee and Strumpf Their measured relationship between the instrument and the variable that it is instrumenting for American downloading is seen to have outlandish implications indicating an important error The instrument is also shown to be related to American record sales contrary to the requirements of their analysis The data set used by O S is biased considerably overstating the share of German files Finally I demonstrate that the instrument must have a de minimus impact on American downloading and thus American record sales negating its potential usefulness and implying that their approach could never have worked In February of 2007 the Journal of Political Economy published an influential article by Professors Felix Oberholzer Gee and Koleman Strumpf O S examining whether file sharing by Americans reduced sound recording sales in the United States The JPE website currently lists their paper as the most heavily downloaded paper on the site and Google Scholar shows that the citations to this paper are mounting in an impressive manner I have previously 2007 examined this paper in some detail 1 In my earlier work I noted that numerous factual assertions found in the O S paper were incorrect and that several tests made to support their main regressions were improperly conducted leading to erroneous conclusions I suggested that the pattern of error was so strong that a reader should be wary of believing anything in their paper I submitted that paper to the JPE but although an independent referee recommended publication Oberholzer Gee and Strumpf in the guise of an anonymous referee recommended against publication and the editor went along with them Their strongest



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