Will Building ‘Good Fences’ Really Make ‘Good Neighbors’ in Science?

Problematic issues are raised by the expressed intention of the European Commission to promote greater awareness on the part of scientists in the “European Research Area” about intellectual property rights and their uses in the context of “Internet intensive research collaborations.” Promoting greater awareness and encouraging more systematic usage of IRP protections are logically distinct, but as policies for implementation – especially within the EC’s Fifth Framework Programme – the former can too readily shade into the latter. Building “good fences” does not make for “good (more productive) neighbors” in science. Balance needs to be maintained between the “open science” mode of research, and private proprietary R&D, because at the macro-system level the functions that each is well-suited to serve are complementary. Recent policy initiatives, particularly by the EC in relation to the legal protection of property rights in database, pose a serious threat to the utility of collaboratively consttructed digital information infrastructures that provide “information spaces” for voyages of scientific discovery. The case for alternative policy approaches is argued in this paper, and several specific proposals are set out for further discussion.

FROM MARKET MAGIC TO CALYPSO SCIENCE POLICY A Review of Terence Kealey's The Economic Laws of Scientific Research

The current reconsideration of public research funding policies in the U.S., and U.K. and other industrialized economies makes it important that policy makers and the public understand the valid economic grounds for government support of science. This review article of a book that which argues for the ending of all government support of non-military R&D, provides an occasion to take stock of what is known about the subject. The review concludes that the extreme laissez-faire science policy arguments adroitly advanced by Terrance Kealey's book are analytically without foundation, and are based upon distortions and misinterpretations of the evidence of economic history, as well as on the misuse of econometric methods. The problem is that Mr. Kealey is an engaging writer and there still is in some policy circles an audience for his message, hence to undo the damage will call for concerted and persistent efforts on the part of economists specializing in the economics of science and technology.

Mitigating "Anticommons" Harms to Science and Technology Research

There are three analytically distinct layers of the phenomenon that has been labeled “the anticommons” and indicted as a potential impediment to innovation resulting from patenting and enforcement of IPR obtained on academic research results. This paper distinguishes among “search costs”, “transactions costs”, and “multiple marginalization” effects in the pricing of licenses for commercial use of IP, and examines the distinctive resource allocation problems arising from each when exclusion rights over research inputs are distributed among independent owners. Where information use-rights are gross complements (either in production or consumption), multiple marginalization—seen here to be the core of the “anticommons” – is likely to result in extreme forms of “royalty stacking” that can pose serious impediments to R&D projects. The practical consequences, particularly for exploratory scientific research (contrasted with commercially-oriented R&D) are seen from a heuristic analysis of the effects of distributed ownership of scientific and technical database rights. A case is presented for the contractual construction of “research resource commons” designed as efficient IPR pools, as the preferable response to the anticommons.law and economics, IPR, licensing, anticommons, patent hold-ups, royalty stacking, database rights, contractual commons, efficient pools

Towards a cyberinfrastructure for enhanced scientific

A new generation of information and communication infrastructures, including advanced Internet computing and Grid technologies, promises to enable more direct and shared access to more widely distributed computing resources than was previously possible. Scientific and technological collaboration, consequently, is more and more coming to be seen as critically dependent upon effective access to, and sharing of digital research data, and of the information tools that facilitate data being structured for efficient storage, search, retrieval, display and higher level analysis. A recent (February 2003) report to the U.S. NSF Directorate of Computer and Information System Engineering urged that funding be provided for a major enhancement of computer and network technologies, thereby creating a cyberinfrastructure whose facilities would support and transform the conduct of scientific and engineering research. The articulation of this programmatic vision reflects a widely shared expectation that solving the technical engineering problems associated with the advanced hardware and software systems of the cyberinfrastructure will yield revolutionary payoffs by empowering individual researchers and increasing the scale, scope and flexibility of collective research enterprises. The argument of this paper, however, is that engineering breakthroughs alone will not be enough to achieve such an outcome; success in realizing the cyberinfrastructure’s potential, if it is achieved, will more likely to be the resultant of a nexus of interrelated social, legal and technical transformations. The socio-institutional elements of a new infrastructure supporting collaboration – that is to say, its supposedly “softer” parts -- are every bit as complicated as the hardware and computer software, and, indeed, may prove much harder to devise and implement. The roots of this latter class of challenges facing “e-Science” will be seen to lie in the micro- and meso-level incentive structures created by the existing legal and administrative regimes. Although a number of these same conditions and circumstances appear to be equally significant obstacles to commercial provision of Grid services in interorganizational contexts, the domain of publicly supported scientific collaboration is held to be the more hospitable environment in which to experiment with a variety of new approaches to solving these problems. The paper concludes by proposing several “solution modalities,” including some that also could be made applicable for fields of information-intensive collaboration in business and finance that must regularly transcends organizational boundaries.

Reforming the Taxation of Human Capital: A Modest Proposal for Promoting Economic Growth

A new scheme of personal income tax reform would eliminate the inefficiencies arising from differences in the tax treatment of investments in intangible human capital and other types of capital formation. It also would offset the exacerbation of those distortions caused by progressive taxation, without requiring abandonment of the latter principle. The proposed incremental reform of the personal income tax regime would permit full deductibility of private costs of education and training, but defer the exercise of the deduction credits. The novel instrument for achieving these objectives is an individually held, non- transferable asset: an untaxed, interest-bearing educational (expense) deduction account -- christened the “UIBEDA,” and pronounced: “we- bedda.” Under plausibly realistic assumptions about the time profile of education-associated earnings differentials, and the progressiveness of tax rate schedules, it is feasible for the Treasury adopting such a scheme to satisfy an intertemporal balanced budget constraint, while in effect acting as a financial intermediary in the market for human capital investments. The UIBEDA scheme facilitates shifting from direct educational subsidies to the use of publicly subsidized student loans, and also can be readily extended to promote selective immigration of workers who have incurred indebtedness for human capital investments abroad.

Economic Policy Analysis and the Internet: Coming to Terms with a Telecommunications Anomaly

The significant set of public policy issues for economic analysis that arise from the tensions between the ‘special benefits’ of the Internet as a platform for innovation, and the drawbacks of the “anomalous” features of the Internet viewed as simply one among the array of telecommunications systems, is the focus of discussion in this chapter. Economists concerned with industrial organization and regulation (including antitrust and merger law) initially found new scope for application of their expertise in conventional policy analyses of the Internet’s interactions with other segments of the telecommunications sector (broadcast and cable television, radio and telephone), and emphasized the potential congestion problems posed by user anonymity and flat rate pricing. Policy issues of a more dynamic kind have subsequently come to the fore. These involve classic tradeoffs between greater efficiency and producer and consumer surpluses today, and a potential for more innovation in Web-based products and service in the future. Many such tradeoffs involve choices such as that between policies that would preserve the original ‘end-to-end’ design of the original Internet architecture, and those that would be more encouraging of market-driven deployment of new technologies that afforded ISPs with greater market power the opportunity to offer (and extract greater profits from) restricted-Web services that consumers valued highly, such as secure and private VOIP.public policy, telecommunications, Web-based products, user anonymity

Understanding Digital Technology’s Evolution and the Path of Measured Productivity Growth: Present and Future in the Mirror of the Past

Three styles of explanation have been advanced by economists seeking to account for the so-called 'productivity paradox'. The coincidence of a persisting slowdown in the growth of measured total factor productivity (TFP) in the US, since the mid-1970's, with the wave of information technology (It) innovations, is said by some to be an illusion due to the mismeasurement of real output growth; by others to expose the mistaken expectations about the benefits of computerization; and by still others to reflect the amount of time, and the volume of intangible investments in 'learning', and the time required for ancillary innovations that allow the new digital technologies to be applied in ways that are reflected in measured productivity growth. This paper shows that rather than viewing these as competing hypotheses, the dynamics of the transition to a new technological and economic regime based upon a general purpose technology (GPT) should be understood to be likely to give rise to all three 'effects.' It more fully articulates and supports this thesis, which was first advanced in the 'computer and dynamo' papers by David (1990, 1991). The relevance of that historical experience is re-asserted and supported by further evidence rebutting skeptics who have argued that the diffusion of electrification and computerization have little in common. New evidence is produced about the links between IT use, mass customization, and the upward bias of output price deflators arising from the method used to 'chain in' new products prices. The measurement bias due to the exclusion of intangible investments from the scope of the official national product accounts also is examined. Further, it is argued that the development of the general-purpose PC delayed the re-organization of businesses along lines that would have more directly raised task productivity, even though the technologies yielded positive 'revenue productivity' gains for large companies. The paper concludes by indicating the emerging technical and organizational developments that are likely to deliver a sustained surge of measured TFP growth during the decades that lie immediately ahead.

The Digital Technology Boomerang: New Intellectual Property Rights Threaten Global “Open Science”

There is a serious threat that ill-considered government support for expanding legal means of controlling access to information for the purpose of extracting private economic rents is resulting in the 'over- fencing of the public knowledge commons' in science and engineering. Such a new 'tragedy of the commons' would bring adverse long-run consequences for future welfare gains through technological progress, and re-distributional effects further disadvantaging the present economically less advanced countries of the world. Radical legal innovations in intellectual property protection that seriously jeopardize the effective conduct of open, collaborative science have been introduced by the little noticed European Database Directive of March 1996. This initiative forms an emblematic and substantively significant aspect of the broader set of transformations in intellectual property rights institutions that have been initiated in response to the economic ramifications of rapid progress in digital information technologies. The EC Directive poses numerous contentious issues in law and economics that will create ambiguities for business and non-profit activities in this area for years to come. The terms on which those issues are resolved will materially affect the costs and organizational feasibility of scientific projects that are of global reach and importance, especially those that depend heavily upon the collection, management and analysis of large volumes of observational data that cannot be regenerated. This paper sets out the economic case for the effectiveness of open, collaborative research, and the forces behind the recent, countervailing rush to strengthen and expand the scope of intellectual property rights protection. Focusing upon innovations in copyright law and the sui generis protection of hitherto unprotected content, it documents the genesis and analyzes the economic implications of the EC's Database Directive, and related legislative proposals (H.R. 3125, H.R. 354 and H.R. 1858) in the US. Several modest remedial proposals are advanced to mitigate the adverse impact of 'the digital technology boomerang' upon open science.intellectual property rights, copyright, sui generis protection of expressive material, economics of information-goods, open science, 'fair use,' scientific databases

Koyaanisqatsi in Cyberspace

Koyaanisqatsi is a Hopi Indian word that translates into English as 'life out of balance,' 'crazy life,' 'life in turmoil,' 'life disintegrating,' all meanings consistent with indicating 'a way of life which calls for another way of living.” While not wishing to suggest either that the international regime of intellectual property rights protection scientific and technical data and information is “crazy” or that it is “in turmoil”, this paper argues that the persisting drift of institutional change towards towards a stronger, more extensive and globally harmonized system of intellectual property protections during the past two decades has dangerously altered the balance between private rights and the public domain in data and information. In this regard we have embarked upon “a way of life which calls for another way of living.” High access charges imposed by holders of monopoly rights in intellectual property have overall consequences for the conduct of science that are particularly damaging to programs of exploratory research which are recognized to be critical for the sustained growth of knowledge-driven economies. Lack of restraint in privatizing the public domain in data and information has effects similar to those of non- cooperative behaviors among researchers in regard to the sharing of access to raw data-steams and information, or the systematic under- provision the documentation and annotation required to create reliably accurate and up-to-date public database resources. Both can significantly degrade the effectiveness of the research system as a whole. The urgency of working towards a restoration of proper balance between private property rights and the public domain in data and information arises from considerations beyond the need to protect the public knowledge commons upon which the vitality of open science depends. Policy-makers who seek to configure the institutional infrastructure to better accommodate emerging commercial opportunities of the information-intensive “new economy” – in the developed and developing countries alike –therefore have a common interest in reducing the impediments to the future commercial exploitation of peer-to-peer networking technologies which are likely to be posed by ever-more stringent enforcement of intellectual property rights.