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Is Technology a Public Good? July 30, 2006

Posted by federalist in Economic Policy.

Basic research seems to meet the classic criteria of public goods:  Namely, once a development is made it is hard to exclude anyone from using it, and the fact that one person uses it does not diminish its value to anyone else.

In fact, it may be useful to refer to an elevated class of public goods we could call “synergistic goods,” which are public goods that actually become more valuable when they are “consumed” by more people.  When a basic technology is studied and used, it tends to get refined and developed more than if it were retained by a single consumer.  For example, this is the motive behind the success of open-source software.

So how do we encourage basic research?  There are various government sources funding it.  Universities are able to engage in it using untaxed dollars.  But presumably we are nowhere near the point of diminishing returns on investments in basic research, and so it would be in our interest to promote even more of it.

Our systems for intellectual property are imperfect for fostering basic research.  In principle the patent system exists to enable those who invest in technology to collect royalties from those who benefit from it.  But patent protection is fragmented by country, and not all valuable technology is patentable.

Furthermore, even when the products of basic research could be protected, there is a large class of basic research for which the economic return is too insecure for any profit-seeking entity to pursue.

Mankind would benefit from increasing investment in basic research, but since it is essentially a global public good how can we increase it?  Do we need a global mechanism for taxing and investing in it?  And is basic research investment something that government-like entities can effectively pursue, without succumbing to the classic problems of bureaucracy (corruption, inefficiency, etc.)?



1. federalist - January 23, 2007

An accepted term that may correspond to “Synergistic Goods” as defined here may be “Anti-Rival Goods.”

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