Over the last two generations, as Andrei Shleifer has noted, most economists and political theorists have shifted from viewing government intervention in a positive light to preferring privatization. Today, there’s a trend toward regulation that was once provided by governments now being provided by private entities acting in their own self-interest—for example, the gradual shift from nationally mandated accounting standards like the Generally Accepted Accounting Principles used in the United States toward the International Financial Reporting Standards promulgated by the International Accounting Standards Board, a private organization based in London. We believe this trend will continue and that governments must rethink what they choose to regulate and what kinds of regulation private entities can provide more efficiently. [...]

[...] We are skeptical about the specific charge against Amazon—namely, that book prices will rise significantly once the company’s dominance is complete—but we are somewhat more sympathetic to the idea that Amazon might act as too powerful a gatekeeper for an important cultural industry, perhaps establishing its own proprietary format for digital content, as it has tried to do with Amazon Word (AZW), the format used on the Kindle reader. Free pricing of book chapters given away in the AZW format, for example, could be used as a Trojan horse, attracting readers as part of a long-term strategy leading to increased platform control and a shift from an open to a closed proprietary standard.