Research

THE SIA FRAMEWORK

Two papers co-authored with President Javier Milei that introduce a decision framework for evaluating antitrust remedies in increasing-returns sectors — where scale itself is productive and its destruction carries measurable cost.

POLICY2026

Scale Safety in Increasing-Returns Sectors: A Decision Framework for Remedy Design

with Google Search as a Worked Illustration

Demian Reidel & Javier Milei

Abstract

This paper introduces the Scale Impact Assessment (SIA), a front-end screen for evaluating whether antitrust remedies risk destroying the productive scale on which quality, reliability, and innovation depend.

Applied to the 2025 Google Search remedies record, the SIA framework classifies lower-fragmentation remedies as easier to reconcile with scale safety than Chrome divestiture. The framework provides regulators and courts with a structured methodology for weighing the costs of reduced scale against the competitive benefits of proposed remedies.

The paper draws on the theoretical foundations established in the companion theory paper, translating formal results on minimum viable scale and fold geometry into practical policy tools.

Key Findings

  • Defines the Scale Impact Assessment as a decision-theoretic screen for antitrust remedy design
  • Demonstrates that productive scale in digital platforms generates consumer surplus that remedies may destroy
  • Applies the framework to the 2025 Google Search case, classifying remedies by fragmentation risk
  • Shows Chrome divestiture crosses the scale-safety boundary while behavioral remedies preserve it
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THEORY2026

Minimum Viable Scale, Local Activation, and Threshold Geometry under Increasing Returns and Endogenous Labor Supply

Demian Reidel & Javier Milei

Target: Journal of Economic Theory

Abstract

This paper develops an exact steady-state existence theory under increasing returns and endogenous labor supply. It provides a scalar diagnostic and closed-form minimum viable scale that determines whether a productive equilibrium exists.

The theoretical framework introduces fold geometry to characterize the boundary between viable and non-viable production regions, a wedge amplifier that quantifies how tax-and-transfer distortions shrink the viability set, and a CES threshold map that traces how substitution elasticity governs activation thresholds.

The decentralized no-fold-crossing condition establishes when market outcomes respect the scale floor without centralized intervention, providing the theoretical foundation for the Scale Impact Assessment framework developed in the companion policy paper.

Key Findings

  • Derives closed-form minimum viable scale under increasing returns with endogenous labor supply
  • Characterizes fold geometry: the topological boundary between viable and non-viable equilibria
  • Introduces the wedge amplifier showing how distortions shrink the viability set
  • Establishes a decentralized no-fold-crossing condition for market self-regulation of scale
  • Maps CES substitution elasticity to activation thresholds via the CES threshold map
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