Economic Gridlock – the Invisible Cost of IP Law

smellsofbikes writes "This week's New Yorker magazine has a financial article, 'The Permission Problem,' discussing the hidden cost of patent, trademark and copyright laws. It's a subject anyone here already knows well, but he brings up two interesting points: 1) He uses the term 'tragedy of the anticommons.' Instead of depletion of a shared resource, this describes under-use of hoarded resources: areas that can't be explored because they're encumbered by patent/copyright issues. As he points out, the result of this is an invisible loss: drugs not made, software not written. The loss is impossible to quantify and difficult to see. I like the term 'tragedy of the anticommons' because it encapsulates a long-winded explanation into a pithy, memorable phrase that will stick with people unfamiliar with the topic. 2) He also cites a study by Ben Depoorter and Sven Vanneste that discusses why anticommons effects are seen, beyond mere competition. Individual right holders value their contribution to the overall project as a significant fraction of the project value, so if there are more than three or four right holders, their perceived value can far exceed the total value of the project, making it uneconomical."

Comments

Re:Calculating Loss

[marxmarv]

Drugs are a special case; much of why the patent system is such a mess is that the same rules are applied to drugs and software, while the economics behind the two fields are so different.

From 10km up, some people come up with a goal, a number of salaried grunts work on it using the known best practices of their trade, the results are tested and reworked, and then (maybe) the product is brought to market, in hopes that the massive investment in development can be paid off by selling large volumes with a high gross profit to potentially underinformed buyers. The main difference is that "small pharma" is bigger than a lot of software concerns, not least because experimenting with drugs in your garage is frowned upon by the Religious Reich.