I interviewed Professor Carl Shapiro, an economist at the Haas School of Business. His research interests center around industrial organization and business law. He said his research questions concern competition and innovation and how these are encouraged or stifled by different economic factors. These factors include patent licensing, industry structure, and the compatibility of competing standards. The question he is best known for exploring, perhaps, is how "network externalities" affect systems competition and industry structure. He explained that network externalities significantly affect markets like the videogame console market because as more consumers purchase a particular console, they form a larger network of users that can play games that are released for that particular console. From the point of the software developer, you will want to maximize the number of consumers who can purchase your game so you will prefer to develop for the console that enjoys the largest number of users. This, in turn, has a positive feedback effect on the size of that network and on that firm's market share.

        Professor Shapiro finds his questions mainly by keeping up on the current economics literature in various journals, but a large portion of his questions come from government antitrust cases. In many cases unanswered economics questions will arise from the debate about whether a certain company wields too much monopoly power or whether a company has a right to patent a certain technology. A third source of research questions, he explains, stems from trying to predict real world business strategies. Should Microsoft leave the videogame console market, or can it take actions to substantially improve the Xbox's market share?

        Professor Shapiro uses a wide variety of data sources in his research depending on the research questions he's attempting to answer. Sometimes government data on consumer spending and industry concentration is appropriate. In some cases, the researcher may actually be able to convince a firm in the market she is studying to cooperate with her and disclose key statistics such as per unit cost or market share. In general, however, access to current real world data from firms is somewhat limited due to every firm's right to keep some information from their competitors in order to maintain a competitive advantage.

        Professor Shapiro said he will be around for the spring semester and would possibly be willing to act as a thesis adviser. He is, however, fairly busy and wants to limit his commitments somewhat.