Research papers of Hal R. Varian
These are academic papers of one sort or another. Look under articles
to find material published in the popular press.
- Public Goods and Private
- Public goods can be provided by tying them to private goods.
Though this is an old phenomenon, Kickstarter has given it a new
life on the internet. This is a simple model of how this mechanism works.
- Bayesian Variable Selection for Nowcasting Economic Time Series [Working paper] [Slides]
- Combining Kalman filters, spike-and-slab regression and model averaging to improve short-term forecasts of time series. (Co-author: Steve Scott)
- Revealed Preference and its Applications [Working paper]
- I describe some applications of revealed prefence theory. Royal Economics Society session in honor of Sydney Afriat.
- Predicting the Present with Google Trends [Working paper] [Zip file with data]
- Keynote address at the Australian Conference of Economists, July 2011.
- Computer Mediated Transactions [Paper]
[Video from AEA meetings][Video from previous presentation]
- The 2010 Ely Lecture at the American Economics Association
meeting, Atlanta Georgia.
- Copyright Term and Orphan Works [Working paper] [Reprint of published article]
- I discuss copyright term extension and its impact on the orphan works and mass digitization problems.
- The Google Library Project [PDF]
- A discussion of some of the economic aspects of the Google Library Project.
- The Economics of Internet Search [PDF]
- Angelo Costa lecture delivered in Rome, February 2007.
- Universal Access to Information [PDF]
- A two-page thought piece on the possibility of universal access to information.
- Copying and Copyright [PDF]
- A short survey of the economics of copying and copyright.
- Who Signed Up for the Do-Not-Call List? [PDF] [HTML]
- (Co-authored with Glenn Woroch and Fredrik Wallenberg) We use census data to determine which socio-demographic groups were likely to sign up for the Federal do-not-call list.
- Demographics of the Do-Not-Call List [PDF]
- A shorter and less technical version of the above paper, published in
IEEE Security and Privacy, Jan/Feb 2005.
- Online Ad Auctions [PDF]
- A short summary of how online ad auctions work, plus a technique to estimate the value they create for advertisers. Published in AER Papers and Proceedings, May 2009.
- Position Auctions [PDF]
- A theoretical and empirical analysis of the ad auction used by Google and Yahoo. International Journal of Industrial Organization, Oct 2006.
- Revealed Preference [PDF]
- This is a survey of revealed preference analysis focusing on the
period since Samuelson's seminal development of the topic with
emphasis on empirical applications. It was prepared for Samuelsonian
Economics and the 21st Century, edited by Michael Szenberg, a volume in honor of Paul Samuelson's 90th birthday.
- System Reliability and Free Riding [PDF]
- The reliability of a system may depend on the contribution of
many people, and thus is potentially subject to incentive problems. I
investigate incentives and system performance in the case where
reliability depends on the total effort, the minimum effort, and the
- Conditioning Prices on Purchase History (with Alessandro Acquisti) [PDF] [Slides]
- We examine the consequence of computer mediated transactions that
allow sellers to condition pricing on the history of interactions with
a particular consumer. Surprisingly, we find that when consumer
valuations do not change with consumption the seller will not want to
condition prices on past purchase behavior. But if consumer valuations
change for subsequent purchases, perhaps due to the provision of
personalized enhanced services, the seller may find it profitable to
condition prices on purchase history. Published in Marketing Science, 24:3, 367-381, Summer 2005.
2004 and earlier
- Linux Adoption in the Public Sector [PDF]
- (Co-authored with Carl Shapiro.) White paper describing some of
the economic issues surrounding open source and open standards
software and its adoption by the public sector.
- How to make a scene [PDF]
- My history as a pundit. Presented in 2004 American Economics Association session on "Economics and Journalism". To appear in
Journal of Economic Education, 2004.
- The Demand for Bandwidth: Evidence from the INDEX Experiment [PDF] [HTML][Slides]
- Summarizes evidence about the demand for broadband that can be gleaned from the Internet Demand Experiment (INDEX).
- Economics of Information Technology [PDF] [HTML]
- An overview and review of the current status of the economic
analysis of IT industries. This is a draft of my November 2001
Mattioli Lecture at Bocconi University, Milan, Italy. (It is a substantially
enlarged treatment of the issues described in the paper immediately below.)
- High Technology Industries and Market Structure [PDF] [HTML]
- A short survey of some of the economic forces at work in high-technology industries, prepared for the Kansas City Jackson Hole Symposium, August 2001.
- What I've Learned about Writing Economics
- A short essay for the Journal of Economic
Methodology, 8:1, 129-132 2001.
- Introduction to Standards Wars [PDF]
- An introduction to a reprint of "The Art of Standards Wars",
prepared for Managing in a Modular
Age: Architectures, Networks and Organizations, (Richard Langlois, Raghu
Garud, Arun Kumaraswamy, eds), Blackwell, 2001 (Original article appeared in California Management Review, 1999.)
- The "New Economy" and Information Technology Policy (with
Pamela Samuelson) [PDF]
- A review of information policy in the 1990s. Prepared "Economic Policy
During the Clinton Administration", held at JFK School of Government, Harvard
University, June 27-30, 2001.
- Academic Publishing in the Online Era: What Will Be For-Fee and What
will be For-Free?
- An online discussion/debate between Hal Varian and Stevan Harnad about
the economics of academic and non-academic publishing. Published in Culture
Machine, May 2000.
- Taxation of Internet Commerce
- A ten-page overview of the issues published by the Internet
Policy Institute. Reprinted in iMP:Information
Impacts, April 2001.
- A Framework for Negotiation on a Microsoft Remedy [HTML]
- A short note on a possible remedy for the Microsoft case called CLOBR:
"compulsory licensing of old binaries." CLOBR is also discussed in Steve Lohr's
View column in the New York Times
on December 12, 1999.
- A Proposal to Eliminate Sales and Use Taxes
- I propose eliminating all state and local sales taxes and replacing them
with a revenue-equivalent state income or consumption tax.
- Economics and Search
- Invited plenary address for SIGIR
99, Berkeley, CA, August 15-19, 1999. Published in SIGIR
Forum, Fall 1999, Volume 33, Number 3. Published version: (
- Market Structure in the Network Age [HTML]
- Prepared for Understanding the Digital Economy conference, May 25-26,
1999, Department of Commerce, Washington, DC.
- Statement before the Subcommittee on Basic Research of the Committee
on Science, United States House of Representatives [HTML]
- March 16, 1999 testimony before the House
Science Committee. (See the National Coordination
Office for Computing, Information, and Communications for background.)
- Effect of the Internet on Financial Markets
- Review of some academic work on electronic markes in an effort to provide
some guidance about the future evolution of cybermarkets.
- Fostering Research on the Economic and Social Impacts of Information
[National Academy Press]
- The National Science Foundation asked the Computer Science and Telecommunications
Board (CSTB) of the National Research Council to gather perspectives on fruitful
approaches to assessment of the impacts of using information technology. CSTB
formed the multidisciplinary Steering Committee on Research Opportunities
Relating to Economic and Social Impacts of Computing and Communications, and
organized a workshop that was held on June 30-July 1, 1997. Hal R. Varian
was chair of the committee that drafted this report.
- Markets for Information Goods
- An overview of how markets deal with the peculiar properties of information
goods. Prepared for Bank of Japan conference, June 18-19, 1998. To appear
in conference proceedings: Monetary Policy in a World of Knowlege-Based
Growth, Quality Change, and Uncertain Measurement, 2000.
- US Government Information Policy (with Carl Shapiro) [PDF] [HTML]
- An overview of information policy, emphasizing economics issues, along
with some recommendations.
- The Information Economy
- A short piece on problems facing the development of the information economy.
Reprinted from Scientific American, September, 1995, pages 200-201. [View this
article in Romanian courtesy of azoft.]
- Economic Issues Facing the Internet
- A survey of the past, present, and future of the Internet which emphasizes
economic issues as of 1996.
- Pricing Electronic Journals
- Some thoughts on how to price electronic journals; published in June 1996
- Economic Aspects of Personal Privacy
- A brief overview of economic aspects of privacy and what appropriate policy
might be in a networked society. Published in Privacy
and Self-Regulation in the Information Age, a report issued by the NTIA.
- The AEA's Electronic Publishing Plans: a Progress Report
- Published in Journal of Economic Perspectives, Summer 1997, Volume
11, Number 3.
- Future of Electronic Journals
- Some speculations about the evolution of academic electronic publishing.
Presented at the Scholarly Communication and Technology
Conference, Emory University, April 1997. Published in Journal
of Electronic Publishing, September 1998.
- How to Build an Economic Model in your Spare Time [PDF]
- This is an essay providing advice to graduate students in economics about
how to do economic modeling. It was written for the American Economist,
and is part of a collection titled Passion and Craft: Economists at Work,
edited by Michael Szenberg, University of Michigan Press, 1997. [Spanish translation
- Estimating the Demand for Bandwidth [PDF]
- One experiment in the INDEX Project offered users
different bandwidths for different prices. We use the data from this
experiment to estimate the demand for bandwidth and the value of
waiting time for users. The parameter estimates for the demand
functions for bandwidth are plausible and well-behaved. The parameter
estimates for the value of time are, on average, very low, but there
are some subjects with relatively high time values.
- Pre-Play Contracting in the Prisoners' Dilemma (with Jim Andreoni) [preprint PDF]
- We consider a modified Prisoners' Dilemma game
in which each agent can offer to pay the other agent to cooperate. The
subgame-perfect equilibrium of this two-stage game is Pareto efficient. We
examine experimentally whether subjects actually manage to achieve this
efficient outcome. We find an encouraging level of support for the
mechanism, but also find some evidence that subjects' tastes for cooperation
and equity may have significant interactions with the incentives provided by
the mechanism. To appear in Proceedings of the National Academy of Sciences, August/September, 1999.
- Versioning Information Goods [PDF] [PostScript]
- This paper describes the economic theory and practice of creating
product lines of information goods, a practice known as
versioning. Versioning is effective since it helps segment the
market and makes value-based pricing feasible. I describe examples of
versioning for both physical and digital information goods, and discuss the
impact of versioning on consumer welfare.
- Circulating Libraries and Video Rental Stores (with Richard Roehl)
- In this note we describe some interesting parallels between
circulating libraries in England in the late seventeenth century and
video rental stores in the U.S. in the decade of the 1980s. Both
industries developed in a similar manner, which suggests that the
underlying economic and social forces were significant determinants of
the outcomes. [Published in First Monday.]
- Differential Pricing and Efficiency
- The classic prescription for economically efficient pricing---set
price at marginal cost---is not relevant for technologies that exhibit
the kinds of increasing returns to scale, large fixed costs, or
economies of scope found in the telecommunications and information
industries. The appropriate guiding principle in these contexts should
be that the marginal willingness to pay should be equal to marginal
cost. This condition for efficiency can be approximated using
differential pricing, and will in fact, be a natural outcome of
profit-seeking behavior. (Published in First Monday, Vol.1 No.2 - August 5th. 1996.)
- Service Architecture and Content Provision: The Network Provider
- Written with Scott Shenker and Jeff MacKie-Mason.
Telecommunications Policy (1996), and in The Internet and
Telecommunications Policy, G. Brock, ed. (forthcoming). There are
at least two
competing visions for the future National
Information Infrastructure. One model is based on the
application-blind architecture of the Internet; the other is based
on the application-aware architecture of cable TV systems and online
services. Awareness is the extent to which the network provider
observes the application or content being transported. We examine
some consequences of these different network architectures for
content provision. For example, we ask why some network architectures
favor mass market vs. niche goods, and examine conflicts between
network providers and users.
- Network Architecture and Content Provision: An Economic
- An earlier version of the above paper, as presented at the Telecom
Policy Research Conference 1995. There are some
additional mathematical examples, and a short section on the effects
of architecture on content creation that we did not include in
the published version.
- Buying, Renting and Sharing Information Goods
- Information goods such as books, journals, computer
software, videos, etc. can often be copied, shared, or rented. I
outline various circumstances under which such sharing may increase or
decrease producer profits. If a rental market is present, more copies
will be sold at a lower price; I derive conditions that illustrate
when this is more or less profitable than a sales-only market. When
content is viewed only a few times and transactions costs of rental
are low, rental may be more attractive than sales to both producers
and consumers. Finally, when users have heterogeneous tastes, a
rental market provides a nice way to segment high-value and low value
users. These effects tend to suggest that rental markets may often
increase profits, contrary to widespread views to the contrary.
- Mechanism Design for Computerized Agents
- The field of economic mechanism design has been an
active area of research in economics for at least 20 years. This
field uses the tools of economics and game theory to design ``rules of
interaction'' for economic transactions that will, in principle, yield
some desired outcome. In this paper I provide an overview of
this subject for an audience interested in applications to electronic
commerce and discuss some special problems that arise in this context.
This paper was presented at the Usenix Workshop on Electronic Commerce,
July 11-12, 1995, New York.
- Pricing Information Goods
- I describe some of the issues involved in pricing information
goods such as computer software, databases, electronic journals and so
on. In particular I discuss the incentives to engage in differential
pricing and examine some of the forms such differential pricing may
take. This paper was presented at the Research Libraries Group
Symposium on "Scholarship in the New Information Environment" held at
Harvard Law School, May 2-3, 1995.
- Pricing the Internet
- Written with Jeff
MacKie-Mason. We describe the technology and costs of the
Internet, then discuss how to design efficient pricing in order to
allocate scarce Internet resources. We offer a "smart market" as a
device to efficiently price congestion.
- Some Economics of the Internet
- Written with Jeff
MacKie-Mason. This paper overlaps substantially with the
paper above ("Pricing"). We describe the history, technology and
costs of the Internet (at greater length than in "Pricing"). We
describe a "smart market" for pricing Internet congestion. There is
more attention to the smart market, and less to other pricing
considerations, than in "Pricing".
- Economic FAQs About the Internet [PDF]
- Some questions and answers about Internet economics. Written
- Usage Pricing FAQs
- Written with Jeff
MacKie-Mason. Written for WWW '94 (Chicago),
which answers some frequently asked questions about usage-sensitive
pricing for Internet resources.
- Pricing Congestible Network Resources
- Written with Jeff
MacKie-Mason. We describe the basic economic theory of
pricing a congestible resource such as an ftp server, a router, a Web
site, etc. In particular, we examine the implications of ``congestion
pricing'' as a way to encourage efficient use of network resources. We
explore the implications of flat pricing and congestion pricing for
capacity expansion in centrally planned, competitive, and monopolistic
- Entry and Cost Reduction
- There is a lot of anecdotal evidence that entry of new firms
reduces not only prices but also costs. However, the causal mechanism
for this phenomenon is far from clear. In this paper I investigate
three models of how entry may cause cost reduction: managerial
incentives, survival of the fittest, and imitation. The models have
quite different implications for social welfare.
- Economic Incentives in Software Design
- I examine the incentives for software providers to design
appropriate user interfaces. There are two sorts of costs involved
when one uses software: the fixed cost of learning to use a piece of
software and the variable cost of operating the software. I show that
a monopoly provider of software generally invests the right amount of
resources in making the software easy to learn, but too little in
making it easy to operate. In some extreme cases a monopolist may
even make the software too easy to learn.
- What Use is Economic Theory? [PDF]
- I examine how neoclassical economic theory is useful to
the understanding of economic policy. I also describe what I
view as the role of economic theory in economics.
This talk was prepared for the conference ``Is Economics
Becoming a Hard Science?'' 29-30 October, 1992, Paris, France. An
earlier version of this paper was published (in French) in A. Autume
and J. Cartelier, ed. L'Economie Devient-Elle Une Science
Dure?, Economica, Paris