Goldman School of Public Policy Working Paper (May 2004)
There is growing public interest in alternatives to intellectual property including, but not limited to, prizes and government grants. We collect various
historical and contemporary examples of alternative incentives, and show when they are superior to intellectual property. We also give an explanation for why federally funded R&D has moved from an intramural activity to largely a grant process. Finally, we observe that much research is supported by a hybrid system of public and private sponsorship, and explain why this makes sense in some circumstances.
Goldman School of Public Policy Working Paper (October 2003)
Farmers incur proportional and fixed transactions costs in selling their crops on markets.
Using data for Peruvian potato farmers, we propose a method to measure these transactions costs.
When opportunities exist to sell a crop on alternative markets, the observed choice of market can be
used to infer a monetary measure of transactions costs in market participation. The market choice
model is first estimated at the reduced form level with a conditional logit, as a function of variables
that explain transactions costs. We then use these market choice equations to control for selection in
predicting the idiosyncratic prices that would be received on all markets and the idiosyncratic
proportional transactions costs that would be incurred to reach all markets. The net between the two
gives us a measure of effective farm-level prices. This allows us to estimate a semi-structural
conditional logit of the market choice model. In this model, the choice of market is a function of
predicted effective farm-level prices, and of market information that accounts for fixed transactions
costs. We can use the estimated coefficients to derive the price equivalence of the fixed cost due to
information. We find that the information on market price that farmers receive from their neighbors
reduces fixed transactions costs by the equivalent of doubling the price received, and is equal to four
times the average transportation cost.
Goldman School of Public Policy Working Paper (July 2003)
There is and always has been virtual consensus among economists that many agricultural
crop support programs cause inefficiency. Equally true, economists also know that whenever
there is inefficiency, there is "room for a deal" that mitigates it. However, the standard
political explanations for the persistence of these inefficient programs rely on the strength of
the farm lobby relative to the diffuse and difficult-to-organize consumers that pay for them.
This is unsatisfactory because, by the logic of economics, there is an opportunity for a deal
that would benefit the farm lobby in exchange for shedding the inefficient programs. If the
farm lobby could itself benefit, then we have no explanation for the persistence of the
inefficient programs. I examine this puzzle, and conclude that increased political
sophistication on the part of agricultural economists could have a high social payoff in terms
of reduced program inefficiencies over time.
Goldman School of Public Policy Working Paper (May 2003)
Goldman School of Public Policy Working Paper (July 2002)
Patents differ from other forms of intellectual property in that independent invention is not a defense to infringement. We argue that the patent rule is inferior. First, the threat of entry by independent invention would induce patentholders to license the technology, lowering the market price. Provided independent invention is as costly as the original cost of R&D, the market price will still be high enough to cover the patentholder's costs. Second, a defense of independent invention would reduce the wasteful duplication of R&D effort that occurs in patent races. In either case, the threat of independent invention creates a mechanism that limits patentholders' profits to levels commensurate with their costs of R&D.
Goldman School of Public Policy Working Paper (May 2002)
Goldman School of Public Policy Working Paper (April 2002)
The rules under which jurisdictions (nations, provinces) can deny immigration or expel residents are generally governed by a constitution, but there do not exist either positive or normative analyses to suggest what types of exclusion rules are best. We stylize this problem by suggesting four constitutional rules of admission: free mobility, admission by majority voite, admission by unanimous consent, admission by a demand threshold for public goods. In a simple model we characterize the equilibria that result from these rules, and provide a positive theory for which constitutional rules will be chosen.
Goldman School of Public Policy Working Paper (March 2002)
I discuss recent contributions to the theory of group formation and the provision of jointly consumed public goods and services. I highlight the distinction between models of pure group formation, and models where the formation of groups and the sharing of public goods are constrained by a division of geographic space into jurisdictions. Much of the literature concerns the distortions that arise when price systems or tax systems are constrained, for example, to serve the dual roles of redistributing income and funding public services. I also highlight the distortions that can arise from arbitrary divisions of space, and review recent contributions that emphasize the distortions that arise when there are both public and private providers of services. My focus is mainly on equilibrium concepts and policy instruments.