The Tragedy of the Anticommons in Knowledge

Abstract

The anticommons in knowledge is distinct from the anticommons in physical objects. The former is always tragic, the latter not necessarily so. For society at large, the tragedy of the anticommons is more serious when it involves knowledge than when it involves physical resources. Buchanan and Yoon’s (2000) formal model of the anticommons is incorrect even within the neoclassical context, and their neoliberal suggestion that single ownership is the socially optimal solution to the tragedy of the knowledge anticommons is misleading. This article argues that the only, epistemically and socially beneficial solution to the tragedy of the knowledge anticommons is to create, expand, and protect the knowledge commons. The article also constructs a simple formal model based on Bessen and Maskin’s (2006) sequential model, as a metaphor for how the comedy of the knowledge commons works. The analysis supports the worldwide movement for free knowledge, and dissents from the evolving political and academic consensus in China in favor of more restrictive intellectual property regimes.

Keywords

knowledge anticommons tragedy knowledge commons

1. Introduction

The overexploitation of common-pool resources has occupied social thinkers for at least two millennia and probably even longer.¹ Early literature for formal analyses of this problem included an article in Danish published by Jens Warming, a Danish economist, in 1911² and an article published by H. Scott Gordon in 1954 (RSAS 2009; Gordon 1954). Katharine Coman’s “Some Unsettled Problems of Irrigation,” published in the first issue of the American Economic Review in 1911, also addressed the problem (Coman 1911; Ostrom 2011; Libecap 2011). In 1968, the ecologist Garrett James Hardin popularized concerns about the misuse of common property resources with a widely referenced article entitled “The Tragedy of the Commons” in the journal Science (Hardin 1968; RSAS 2009).

Dual to the concept “commons”³ is the concept “anticommons.” The idea was popularized in a 1998 article by Michael Heller published in the Harvard Law Review entitled “The Tragedy of the Anticommons: Property in the Transition from Marx to Markets.” According to the article, Frank Michelman appeared to have coined the term “anticommons” by introducing the equivalent of an anticommons through his speculative definition of a “regulatory regime” in his 1982 article challenging the presumptive efficiency of private property,⁴ where he defined a “regulatory regime” to be a type of property “in which everyone always has rights respecting the objects in the regime, and no one, consequently, is ever privileged to use any of them except as particularly authorized by the others.” This definition is based upon a kind of logical duality: “[i]f a regime exists in which all are privileged to use whatever objects they wish and in which no one holds exclusionary rights (that is, a commons), then, as a matter of logic, an anticommons also could exist where no one is privileged to use objects and everyone has the right to exclude” (Heller 1998).

According to Heller (1998) there are only a few hypothetical examples for which an anticommons under Michelman’s definition, which precludes use of the property by anyone, is the most efficient property regime. Heller (1998) finds that “for most resources that people care about, some level of use is preferable to non-use, and an anticommons regime is a threat to, rather than the epitome of, optimal use.” He concludes that “[a]nticommons property is prone to the tragedy of underuse.” It is Heller who coined the term “tragedy of the anticommons” (Heller 2008: 18, 21).

As a practical matter Epstein (2009) noted that the holdout problem, one of the potential outcomes in an anticommons, has long been a concern of public policy makers.⁵ Epstein (2009) also noted that “the ability to link this problem up with the issue of overconsumption of shared resources—or commons—opens up previously unappreciated avenues for research.” Buchanan and Yoon (2000) tried to unite the concepts of a commons and anticommons mathematically. Some reviewers may have been attracted to the mathematical beauty in Buchanan and Yoon’s (2000) formal model, in which the anticommons and commons problems are shown to be symmetrical in several respects. However, on the one hand, their formulation is incorrect even within the neoclassical context, because they mistook some basic concepts that are at least as old as what was considered by Jules Dupuit (Coloma 2003)⁶; on the other hand, even if it were correct within the neoclassical context, their formal model should be still ideological rather than universally true, as is the case with most other neoclassical economic models. For example, the model ignores several dimensions of intellectual property issues explored in heterodox economics.⁷

This article discusses the tragedy of the anticommons with respect to a special category, “knowledge,” which is distinct from physical objects. While Heller and Eisenberg (1998) and Heller (2008: 76-78) warned that the privatization of biomedical research “risks creating a tragedy of the anticommons through a proliferation of fragmented and overlapping intellectual property rights,” they did not generalize their criticism of intellectual property rights. Instead they claimed that the tragedy of underuse arising out of the biomedical anticommons “is distinct from the routine underuse inherent in any well-functioning patent system.” This article challenges that delimitation, and argues that intellectual property per se is the very source of the tragedy of the anticommons in knowledge and that the tragedy is unavoidable so long as an intellectual property regime exists.

The rest of this article is organized as follows. The second section analyzes both the anticommons in knowledge, which is distinct from the anticommons in physical objects, and the tragedy of the anticommons in knowledge. This is followed by a third section that refutes the neoliberal argument that single ownership is the socially optimal solution to the tragedy of the knowledge anticommons. The fourth section argues that the only epistemically and socially beneficial solution to the tragedy of the knowledge anticommons is to create, expand, and protect the knowledge commons. In the fifth section, a simple model based on Bessen and Maskin’s (2006) sequential model is constructed as a metaphor for how the comedy of the knowledge commons works. The last section is the conclusion.

2. The Anticommons Tragedy in Knowledge

The concept of the anticommons can be traced back to at least as early as 1838. In that year Antoine Augustin Cournot published his Researches into the Mathematical Principles of the Theory of Wealth, which included his “complementary monopoly” theory (Sonnenschein 1968; Heller 2008: 42). Hugo Sonnenschein in a 1968 article demonstrated a formal duality between Cournot’s theory of duopoly and his theory of complementary monopoly (Sonnenschein 1968; Feinberg and Kamien 2001; Gardner, Gaston, and Masson 2002). Nirvikar Singh and Xavier Vives in a 1984 article provided a general treatment of the duality between Cournot competition and Bertrand competition, showing that oligopolists selling complementary products will choose to compete over price rather than output (Singh and Vives 1984; Gardner, Gaston, and Masson 2002). The methodology these and other researches provided has been adopted by some scholars for investigating the regime of anticommons and for economic modeling of the anticommons.

These formal economic models for analyzing anticommons and the tragedy of the anticommons in physical objects may also give clues about anticommons and the tragedy of the anticommons in knowledge. For example, the simultaneous anticommons problem illustrated in Coloma’s (2003) model, which corrected and reformulated Buchanan and Yoon’s (2000) formal model within the neoclassical context, may be also used as a metaphor for one of the two mechanisms by which an anticommons might be created in biomedical research—by creating too many concurrent fragments of intellectual property rights in potential future products (e.g. the existence of separate patents on complementary gene fragments) (Heller and Eisenberg 1998; Landes and Posner 2003: 316), and the sequential anticommons problem illustrated in the model in Parisi, Schulz, and Depoorter (2004) and Schulz, Parisi, and Depoorter (2002) may be also used as a metaphor for the other mechanism—by permitting too many upstream patent owners to stack licenses on top of the future discoveries of downstream users (Heller and Eisenberg 1998).

Despite some insights, the existing formal economic models for analyzing the anticommons have limited explanatory power. They fail to address the full scope of anticommons problems in physical objects. Furthermore, the models are basically designed for explaining an anticommons in physical objects and therefore miss some of the distinctive problems related to an anticommons in knowledge.

First, the tragedy of the anticommons in knowledge is much more severe than in physical objects, because of the idiosyncratic nature of knowledge: the existence of substantial, widespread, and even ubiquitous positive knowledge externalities, which will be significantly inhibited by the regime of anticommons.

The essence of knowledge creation is a course of systematic, indivisible, continuous, and dynamic development. An intellectual property regime, however, tries to break up such a course into fragments of intellectual monopolies. In the words of Michael Polanyi, “[i]t tries to parcel up a stream of creative thought into a series of distinct claims, each of which is to constitute the basis of a separately owned monopoly,” and tries to divide up “the growth of human knowledge. . .into such sharply circumscribed phases” (Polanyi 1944; Machlup 1958). In that case, each owner, i.e. the monopolist of each fragment of “knowledge,” has the right to exclude others from using that fragment, and thus no one will have the freedom to use the whole stream of that “knowledge.” The anticommons in knowledge so created poses a dire threat to the growth of human knowledge. For example, as Heller and Eisenberg (1998) mentioned, “[p]rivatization of upstream biomedical research in the United States may create anticommons property that is less visible than empty storefronts but even more economically and socially costly.”

Second, when there are significant pervasive negative externalities of use of physical resources, an anticommons in physical objects may be a better regime for social welfare because of less use of the resources, whereas with an anticommons in knowledge that is not the case. The loss of positive externalities from an anticommons in knowledge creation is unlikely to be offset by reductions in the negative externalities accompanying knowledge creation.

As neoliberals always ignore or downplay externalities,⁸ Buchanan and Yoon (2000) did not consider externalities in their model for commons and anticommons. Coloma (2003) corrected and improved Buchanan and Yoon’s (2000) model within the neoclassical context, taking externalities into account for the problem of the commons by introducing a specific cost function. But his model only considered a so-called reciprocal externality, which is a localized negative externality. He did not consider negative externalities on environments outside the commons property, which are pervasive negative externalities. For the problem of the anticommons, his model considered neither the localized negative externalities nor the pervasive negative externalities. When negative externalities are pervasive and significant, as is often the case, less use of the resources as a result of the anticommons regime than the “efficient” quantity determined in either Buchanan and Yoon’s (2000) or Coloma’s (2003) model may be better for social welfare. In some circumstances, even no use of resources as a result of an anticommons regime under Michelman’s definition⁹ may be the best use. Two examples of the latter are Robert Ellickson’s hypothetical wilderness preserve, which “‘any person’ has standing to enforce,” and James Krier’s hypothetical nuclear-waste dump, which is so dangerous that everyone “has standing to exclude” (Heller 1998: 667, 668, note 214, note 215, and note 216).

For “knowledge,” however, there are never any of the above-mentioned pervasive negative externalities. For an anticommons in physical objects, “less use” is not necessarily “underuse” and in some circumstances even no use may be the best use, which may be called “the comedy of the anticommons” (Heller 2008: 46, 47). For an anticommons in knowledge, “less use” is necessarily the “underuse,” thus becoming tragic.

Finally, when pervasive negative externalities of use of physical resources are minor, possible coordination and cooperation between multiple owners (excluders) in an anticommons in physical objects may reduce the extent of underuse, but the underuse will not be eliminated; for an anticommons in knowledge, on the other hand, not only is there the underuse that such coordination and cooperation will not be able to eliminate, but much more importantly, such “cooperation” will inhibit the positive knowledge externalities to a greater extent.

Both Buchanan and Yoon’s (2000) and Coloma’s (2003) model only applied non-cooperative games in analyzing the commons and anticommons problems, without considering the cases of cooperative games. In reality, however, there exists the potential for coordination and cooperation between multiple owners (excluders) in an anticommons, “with success more likely within close-knit communities than among hostile strangers” (Heller and Eisenberg 1998; Heller 1998: 625, and note 17).¹⁰ When pervasive negative externalities are minor, such cooperation, if successful, will improve social welfare by reducing the extent of underuse. The result of the successful cooperation may be an equilibrium where these owners’ (excluders’) total surplus is maximized, the same as the equilibrium under the single ownership, where the single owner’s total surplus is maximized, as shown by Buchanan and Yoon (2000). Buchanan and Yoon’s (2000) analysis suggested that the equilibrium under either the single ownership or efficient collective management is socially optimal, but the suggestion is incorrect even according to neoclassical standards. The equilibrium point, with less quantity supplied and higher price, actually deviates from the “true,” socially optimal point, where the average revenue given by the demand function is equal to the social marginal cost, as shown in Coloma’s (2003) model, which corrected and reformulated Buchanan and Yoon’s (2000) model within the neoclassical context.¹¹ The deviation derives from the market power that the single owner has or the multiple owners (excluders) under the cooperation in the anticommons collectively have by virtue of monopolizing the physical resources. That is to say, when the pervasive negative externalities are modest, cooperation between the multiple owners (excluders) in the anticommons in physical objects, even if successful, will not eliminate the tragedy of underuse.¹²

This point is also true of the anticommons in knowledge. For example, when patents are blocking, efficiency would be improved by their joint use, which “could be brought about either by the sale of all the patents to a single firm (whether one of the patentees or a different firm altogether) or by a cross-licensing agreement that would permit each of the firms to use all the patents” (Landes and Posner 2003: 383). Such joint use, however, would not be socially optimal, because the single firm would have very strong market power or the result of the cross-licensing agreement “may be to disguise a cartel as a lawful patent monopoly” (Landes and Posner 2003: 383). This is the reason why patent pooling and cross-licensing on the patent side or the blanket licensing on the copyright side have been targets of careful antitrust scrutiny (Landes and Posner 2003: 382, 383; Heller and Eisenberg 1998; Heller 2008: 72, 73, 196). Furthermore, it is particularly noteworthy that the result of the insiders’ cooperation through these voluntary agreements is that access to and the free use and distribution of the “knowledge” by outside competitors and society at large will be restricted or blocked to a greater extent and therefore the positive knowledge externalities will be inhibited more significantly.

To sum up, the anticommons in knowledge is always tragic, while the anticommons in physical objects is not necessarily so. For society at large, the tragedy of the anticommons in knowledge will be much more tragic than that in physical objects.

3. Single Ownership Is Not the Way Out

Heller (2008: 21, 41, 42) notes that after he (1998) proposed the possibility of an anticommons tragedy, Buchanan and Yoon (2000) “demonstrated my anticommons hypothesis mathematically” and “[a]ccording to their model, society gets the highest total value from a resource . . . when a single decision maker controls its use.” Actually, however, Buchanan and Yoon’s mathematical model fails to address the full range of anticommons problems identified in Heller (1998), and the authors’ suggestion that the equilibrium under either the single ownership or efficient collective management is socially optimal is misleading.

As mentioned in the second section of this article, Buchanan and Yoon (2000) considered neither localized negative externalities nor pervasive negative externalities in their model for commons and anticommons. Even when pervasive externalities are minor, their suggestion is still wrong, because the single owner has the market power, “[u]nderuse can also arise in the monopoly context, when a single owner blocks access to a resource,” and this situation will also be tragic (Heller 2008: 45; Coloma 2003). The problem of underuse may disappear when there is perfect price discrimination (Coloma 2003), but “[i]n practice, perfect first-degree price discrimination is almost never possible” (Pindyck and Rubinfeld 2001: 373, 407). Even if perfect price discrimination is possible in practice, all of the consumer surplus will be captured by the monopolist as a result and it will most likely do much harm to social welfare in the long run, which is generally considered undesirable.

It seems that although in the commons/anticommons context there is still underuse under single ownership when pervasive externalities are minor, in the anticommons context alone collecting rights into single ownership may eliminate the tragedy of the anticommons and therefore improve the situation if pervasive externalities are minor. However, even if concerns about the adequacy of collecting rights into single ownership as a response to the underuse problems caused by an anticommons could be overcome, other problems remain. In practice “it is easier to fragment than to reconvene fragmented property” (Parisi, Schulz, and Depoorter 2004; Heller 2008: 213). As Heller pointed out, collecting rights from an anticommons into usable private property bundles is often brutal and slow, and both markets and governments may fail to do so (Heller 1998; Heller and Eisenberg 1998). For example, “[l]and is much easier to break up than to put back together.” Eminent domain is one way to unlock the value frozen in gridlocked land, “but it’s a crude solution” (Heller 2008: 110, 111).¹³ Obviously, it is even harder to solve the cross-border anticommons tragedy at the international level resulting from fragmented sovereignty, as Adam Smith observed in 1776 in The Wealth of Nations: “The navigation of the Danube is of very little use to the different states of Bavaria, Austria and Hungary, in comparison of what it would be if any of them possessed the whole of its course till it falls into the Black Sea”(Smith 1789: book 1, chapter 3, paragraph 8; Buchanan and Yoon 2000; Heller 2008: 182, 183).¹⁴

The above points seem also true of the anticommons in knowledge. Both markets and governments may find it difficult to dissolve barriers to knowledge production assembled under privatization. For example, one program can infringe many different software patents at once. Linux, the kernel of the GNU/Linux operating system, may have infringed as many as 283 different U.S. software patents (Stallman 2005). A company that developed a treatment for Alzheimer’s disease found it could not bring it to market unless it bought access to dozens of patents and “[a]ny single patent owner could demand a huge payoff; some blocked the whole deal” (Heller 2008: xiii). A final point to remember is that in this emerging new era of technocapitalism,¹⁵ even if these formidable obstacles to consolidation can be overcome, the intellectual monopoly created will likely be detrimental to the diversity and dynamics of knowledge development, replacing the “tragedy” of the anticommons with the “Sargasso Sea” of monopoly.

4. How to Solve the Anticommons Tragedy in Knowledge

Intellectual property rights are the source of the tragedy of the anticommons in knowledge. It is impossible to find a socially beneficial way to overcome the tragedy within the legal framework of intellectual property. As discussed above, neither “cooperation” between multiple right holders (excluders) nor collecting rights into single ownership, if possible, is a socially beneficial way to overcome the anticommons tragedy in knowledge. On the contrary, these partial “solutions” risk blocking the free use and distribution of knowledge to an even greater extent. This is because of the negative meta-externalities of a well-established intellectual property regime.

“Meta-externalities” refer to the unintended consequences of legal and economic activities that can affect the broad contours of society and culture. Heterodox economists attend to them, while neoclassical economists usually ignore them (Cohn 2007: 17, 49, 335). Many heterodox economists are uneasy about the cultural and social implications of inhibiting free access to knowledge and information by society at large. Many philosophers find that privatizing and commercializing the results of scientific research—particularly patenting the results of research—is both epistemically and socially detrimental due to similar concerns (Biddle 2012).

The only epistemically and socially beneficial solution to the tragedy of the anticommons in knowledge lies in a return to a tradition of the commons. Historically in the United States the “commons has most often referred to shared spaces that allow for free speech and the democratic process, most notably the New England town commons” (Hess and Ostrom 2006). This is the focus of Benkler’s “commons-based production” of open science, open libraries, and collaboratories (Hess and Ostrom 2006; Benkler 2004). In other words, the solution to the tragedy of the knowledge anticommons lies in its dual concept, the “knowledge commons,” that is the effort to create, expand, and protect knowledge commons.

At present, the term “knowledge commons” is “only loosely defined, ranging from jointly owned intellectual property to public property and the public domain.” The mainstream argues that the term, when used within the intellectual arena to frequently refer to the knowledge environment for free speech, universal open access, and self-governance, is only a battle cry (Hess and Ostrom 2006). Research on how to create and nurture a knowledge commons, however, is well underway in the United States.¹⁶ Regretfully, in China almost no attention has been paid to the “knowledge-commons” movement in the United States. As I pointed out in Zhou (2011), “[v]ery few people in China have the courage to doubt or oppose the accepted doctrine of intellectual property rights and the legal system of intellectual property rights as a whole from the philosophical, political, economic, and jurisprudence angles.” Unfortunately, the dogma of intellectual property rights prevalent in the United States is now in an even more dominant position within the intellectual arena in China than in the United States.

In this article, I use the term “knowledge commons” to refer to a knowledge environment of freedom in knowledge development and universal open access, and argue that development of the knowledge commons thus defined is the epistemically and socially beneficial solution to the tragedy of the knowledge anticommons. The knowledge commons is essentially distinct from natural-resource commons in that, as many scholars mentioned, knowledge in the knowledge commons, as a universal public good, is both nonexclusionary and nonrivalrous, while resources in natural-resource commons are more or less nonexclusionary but rivalrous (Hess and Ostrom 2006).

It is both nonexcludability and rivalrousness that together cause a natural-resource commons to be prone to the tragedy of overuse. According to Hardin (1998), there are either unmanaged commons or managed commons. For an unmanaged commons, “[a]s overuse of resources reduces carrying capacity, ruin is inevitable.” For a managed commons, it “describes either socialism or the privatism of free enterprise. Either one may work; either one may fail: ‘The devil is in the details.’”

Actually, however, “the privatism of free enterprise” will almost never “work.” This is because the equilibrium under either the single ownership or the fragmented ownership in an anticommons as a result of privatization of a commons, or under the cooperation between multiple rational, self-interested owners (users) in a commons, will almost always deviate from the efficient point, as shown in Figure 1 (without considering the pervasive externalities) in Coloma (2003).

As for “socialism,” Hardin may be right: it may work; it may fail. It will be what Hess and Ostrom (2006) called “the tragicomedy of the commons.” Retaining the resource as common property and locking multiple users together may reinforce communitarian and non-utilitarian values, which are hard to quantify in monetary terms (RSAS 2009; Heller 1998: note 17; Heller 2008: 46). Carol Rose, Elinor Ostrom, and others have shown how the users sometimes create their own system of governance to manage common property efficiently, which Rose called “the comedy of the commons” (Heller 1998: note 17; RSAS 2009; Heller 2008: 46, 214).¹⁷ However, there are still many situations in which collective actions are virtually ineffective.¹⁸ Likewise, whether or not state-owned enterprises (SOEs) could play an important role in avoiding or overcoming the tragedy of the natural-resource commons is also a difficult, unresolved problem, though it is worth exploring.¹⁹ All in all, “there is no one solution to all commons dilemmas” (Hess and Ostrom 2006).

By contrast, there is one solution to all knowledge anticommons dilemmas: provision of an environment called “knowledge commons.” It is both nonexcludability and nonrivalrousness of knowledge in the knowledge commons that make it impossible to cause the tragedy of overuse. On the contrary, “the more people who share useful knowledge, the greater the common good” (Hess and Ostrom 2006).

The utilitarian dogma of an incentive-access tradeoff is not true. Free access to knowledge will not be a disincentive to the creation of inventions and literary and artistic works. The real incentives for human knowledge creation are not financial as assumed in an intellectual property regime. The quest for knowledge is rooted in human nature. Ultimately, people produce knowledge “for the same reason that a silk worm produces silk” (Marx 1862-1863: addenda to part I). Natural incentives and passions for knowledge creation exist among pure (basic) researchers, artists, and numerous others conducting applied research in academic communities and elsewhere. A striking instance is the flourishing free software/open source movements, which have spread into the direct production process (See Zhou 2010, 2011).

In this emerging new era of technocapitalism, technocapitalist corporations are heavily dependent on the appropriation of intellectual creativity as intellectual property (Suarez-Villa 2009). Actually, the current intellectual property regimes may impede both sustainability-enhancing innovations and knowledge dissemination (Henry and Stiglitz 2010) and distort research toward unsustainable projects. The commodification of intellectual creativity entails wholesale dispossessions (Harvey 2003).²⁰

According to Henry and Stiglitz (2010), experience with genetically modified organisms shows that an open source model of research and production markedly different from the more traditional models based on protection of intellectual property is more likely to bring wider social benefits, both in the short and the long run. Williams’s (2013) empirical study also suggested that the private firm Celera’s short-term gene-level IP had persistent negative effects on subsequent innovation relative to a counterfactual of Celera genes having always been in the public domain.

While Williams (2013) claimed that as “Celera’s gene-level IP did not depend on patent protection, . . . [t]o the best of my knowledge, there exists no direct evidence on how gene patents have affected subsequent product development,” Bessen and Maskin’s (2006) sequential model showed that patents may inhibit sequential and complementary innovation while “imitators can provide benefit to both the original inventor and to society more generally.” They (2006) noted that it is in industries like software or computers that innovation is both sequential and complementary. Actually, however, sequentiality and complementarity is the very essence of almost all activities of knowledge creation.²¹ Therefore, patents will be counterproductive in almost all industries, in which innovation is always sequential and complementary (Bessen and Maskin 2006; Landes and Posner 2003: 326, 327, 366).

Bessen and Maskin’s (2006) sequential model showed that in a regime with patent protection, the threshold at which a firm with a higher cost does R&D when it has no patent is less than that at which the firm with a patent does R&D.²² In the United States, the firms that obtained the most software patents actually reduced their R&D spending relative to sales after patent protection was strengthened. In Japan, there was no concomitant increase in R&D or innovation after the Japanese patent system was significantly strengthened starting in the late 1980s. These results are quite consistent with the sequential model of innovation, but are difficult to reconcile with the orthodox incentive theory of patents (Bessen and Hunt 2004; Bessen and Maskin 2006). Bessen and Maskin’s (2006) sequential model also showed that expected net social welfare will most likely be higher in equilibrium without patent protection than in equilibrium with such protection and that this result holds even with substantial dissipation of rents in the no-patent case.²³

These heterodox results with respect to patents in Bessen and Maskin (2006) have been corroborated by similar results on the copyright side in Zhou (2013). A sensible modification by Zhou (2013) to Landes and Posner’s (2003) copyright model comes to the conclusion: “an increase in the level of copyright protection reduces the total number of copies of a single work sold, reduces the net economic welfare generated by a single work, and reduces the total welfare generated by equivalent works.”²⁴

These and some other heterodox research results are contributing to a theoretical foundation for the creation, expansion, and protection of knowledge commons as the solution to the tragedy of the anticommons in knowledge, taking into consideration the dynamic nature of knowledge and the effects of knowledge spillover.

5. The Comedy of the Knowledge Commons: A Simple Model

In this section, I will construct a simple model based on Bessen and Maskin’s (2006) sequential model, as a metaphor for how the comedy of the knowledge commons, the ideal solution to the tragedy of the anticommons in knowledge works. The comedy seems romantic in a society today where even an unrecognizable one-and-a-half-second sound clip is copyright-protected (Heller 2008: 14, 207), but it can be realistic. Just think: sharing of software “is as old as computers, just as sharing of recipes is as old as cooking”, the software-sharing communities existed for many years until the early 1980s (Stallman 2007), and “[u]ntil the 1970s, much biomedical research followed a ‘commons’ model, under which anyone could use research results freely” (Heller 2008: 58).

Bessen and Maskin’s (2006) sequential model focuses on comparison between social welfare with and without patent protection. The simple model I will construct in this section is about how social welfare could be further improved within the knowledge commons (i.e. a regime without patent protection), or the maximization of social welfare within the knowledge commons.

Here I denote the social welfare resulting from a spillover and diffusion of inventive and technological knowledge generated by at least one firm into the knowledge commons by F, so that

F = F [d, v_{2}^{000} (s)],

where d denotes the extent of such spillover and diffusion, $v_{2}^{000}$ (s) is the threshold at which the passive firm 2 does R&D in the dynamic model with no patent protection in Bessen and Maskin (2006), that is, the threshold such that firm 2 will undertake R&D with a cost of c if v > $v_{2}^{000}$ (s), and

v_{2}^{000} (s) = \frac{c [1 - p_{2} + q (p_{2} - p_{1})]}{s (p_{2} - p_{1})}

I assume for convenience that d = 1 – 2s, and that equation (1) can be rewritten as

F = a f (d) - b g [v_{2}^{000} (s)] = a f (1 - 2 s) - b g {\frac{c [1 - p_{2} + q (p_{2} - p_{1})]}{s (p_{2} - p_{1})}},

where a > 0, b > 0, f(d) ≥ 0, $\partial f / \partial d$ > 0, $\partial^{2} f / \partial d^{2}$ ≤ 0, and g[ $v_{2}^{000}$ (s)] ≥ 0.

In the dynamic model with no patent protection in Bessen and Maskin (2006),

W_{2}^{000} = \frac{s p_{2} v_{2}^{000} - q c}{1 - p_{2}}

where $W_{2}^{000}$ is firm 2’s expected long-run payoff corresponding to $v_{2}^{000}$ , the threshold at which firm 2 does R&D. Logically, the corresponding investment threshold $v_{2}^{000}$ is higher and more investment in R&D will then be abandoned the larger $W_{2}^{000}$ is. The long-term welfare loss to society will accelerate as a result of underinvestment in R&D therefrom, that is $\partial g / \partial W_{2}^{000}$ > 0 and $\partial^{2} g / \partial W_{2}^{000^{2}}$ > 0, because of a lost opportunity to generate positive externalities (spillover effects) by the innovative and technological knowledge²⁵ that will otherwise be created. Therefore,

\frac{\partial g}{\partial v_{2}^{000}} = \frac{\partial g}{\partial W_{2}^{000}} . \frac{\partial W_{2}^{000}}{\partial v_{2}^{000}} = \frac{\partial g}{\partial W_{2}^{000}} \frac{s p_{2}}{1 - p_{2}} > 0,

\frac{\partial^{2} g}{\partial v_{2}^{000^{2}}} = \frac{s p_{2}}{1 - p_{2}} \frac{\partial^{2} g}{\partial W_{2}^{000^{2}}} \frac{\partial W_{2}^{000}}{\partial v_{2}^{000}} = \frac{s p_{2}}{1 - p_{2}} \frac{\partial^{2} g}{\partial W_{2}^{000^{2}}} \frac{s p_{2}}{1 - p_{2}} > 0 .

From equations (1)-(6), the change in F, the social welfare resulting from knowledge spillover and diffusion, with respect to a change in s, the proportion of a firm’s gross revenue in the total value v when the firm is successful in making the discovery and there is no patent protection in Bessen and Maskin (2006), which is larger the smaller d is, equals

\frac{\partial F}{\partial s} = - 2 a \frac{\partial f}{\partial d} + \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{2} (p_{2} - p_{1})} \frac{\partial g}{\partial v_{2}^{000}},

²⁶

and the second-order partial derivative of F with respect to s equals

\frac{\partial^{2} F}{\partial s^{2}} = 4 a \frac{\partial^{2} f}{\partial d^{2}} - \frac{b c^{2} {[1 - p_{2} + q (p_{2} - p_{1})]}^{2}}{s^{4} {(p_{2} - p_{1})}^{2}} \frac{\partial^{2} g}{\partial v_{2}^{000^{2}}} - \frac{2 b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{3} (p_{2} - p_{1})} \frac{\partial g}{\partial v_{2}^{000}} < 0 .

Equations (7) and (8) indicate that there exists s = $\bar{s}$ such that F( $\bar{s}$ ) is its maximum; that is, when there is no patent protection, at some level of knowledge spillover and diffusion, the social welfare resulting from such spillover and diffusion will be maximized.

I further assume for convenience that equation (3) can be reduced to

F = a (1 - 2 s) - \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{s (p_{2} - p_{1})} .

Then

\frac{\partial F}{\partial s} = - 2 a + \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{2} (p_{2} - p_{1})}

²⁸

\frac{\partial^{2} F}{\partial s^{2}} = - \frac{2 b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{3} (p_{2} - p_{1})} < 0 .

²⁹

Maximization of F requires that s satisfy

\frac{\partial F}{\partial s} = - 2 a + \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{2} (p_{2} - p_{1})} = 0 .

This yields

\bar{s} = \sqrt{\frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{2 a (p_{2} - p_{1})}}

Hence, the maximum of F is given by

F_{\max} = F (\bar{s}) = a - \sqrt{\frac{2 a b c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}}} - \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}} \sqrt{\frac{2 a (p_{2} - p_{1})}{b c [1 - p_{2} + q (p_{2} - p_{1})]}} .

³⁰

In a knowledge commons, where there is no patent protection, if s < $\bar{s}$ = $\sqrt{\frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{2 a (p_{2} - p_{1})}}$ , then this indicates that though it gains from a larger rate of knowledge spillover and diffusion, society loses to a greater extent from underinvestment in R&D by firms. For pure research (basic research), this problem had been and can be solved by what Heller (2008: 58) referred to as “a ‘commons’ model,” under which the government, universities, and philanthropies pay for much basic research and give away the results to the public. For applied research and technology innovations in the direct production process in the economy, the flourishing free software/open source movements, which embody passions for knowledge creation, altruism, and volunteering for free knowledge, and a new system of governance other than the “market” or the “firm,” the traditional system of governance, are providing spiritual direction (See Zhou 2010, 2011).³¹

On the other hand, if s > $\bar{s}$ = $\sqrt{\frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{2 a (p_{2} - p_{1})}}$ , then this indicates that though it gains from more investment in R&D by firms, society loses to a greater extent from a lower rate of knowledge spillover and diffusion. This situation may arise from some extent of “natural monopoly” in knowledge by the firms, which is different from and usually weaker than intellectual monopoly in the form of intellectual property. To solve this problem, establishment of alternative and competitive platforms, such as the free software platforms in the free software/open source movements, may be needed (Zhou 2010, 2011), and philanthropies such as the Bill & Melinda Gates Foundation may play a crucial role in stimulating knowledge spillover and diffusion (Heller 2008: 69, 197).

6. Conclusion

The anticommons in knowledge is distinct from the anticommons in physical objects. The former is always tragic, while the latter is not necessarily so. For society at large, the tragedy of the former will be much more tragic than the tragedy of the latter.

The neoliberal argument that single ownership is the socially optimal solution to the tragedy of the knowledge anticommons is misleading. Actually, intellectual property per se is the very source of the tragedy of the knowledge anticommons, and the tragedy is unavoidable so long as the intellectual property regime exists. The only epistemically and socially beneficial solution to the tragedy of the knowledge anticommons is to create, expand, and protect the knowledge commons. The comedy of the knowledge commons comes from the positive meta-externalities of performance of the knowledge commons. Some heterodox formal models can be constructed as metaphors for how the comedy works.

Hopefully, this article with heterodox results would be a piece of writing in support of the worldwide movement for free knowledge, a new wave of which includes the Academic Spring movement starting in 2012, the Cost of Knowledge project, and the Access2Research initiative,³² and it would also be a dissenting voice in China.

Footnotes

Acknowledgements

I thank the reviewers and Prof. Steve Cohn for their helpful comments and suggestions.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author received no financial support for the research, authorship, and/or publication of this article.

1

For example, as Michael Heller mentioned, Pericles, in Thucydides’s The History of the Peloponnesian War, argued that the Peloponnesians “devote a very small fraction of the time to the consideration of any public object, most of it to the prosecution of their own objects. Meanwhile each fancies that no harm will come of his neglect, that it is the business of somebody else to look after this or that for him; and so, by the same notion being entertained by all separately, the common cause imperceptibly decays” (Thucydides n.d.: book 1, chapter 5; : 208). Aristotle, in his Politics, noted that “that which is common to the greatest number has the least care bestowed upon it. Every one thinks chiefly of his own, hardly at all of the common interest; and only when he is himself concerned as an individual” (Aristotle n.d.: book 2; Heller 2008: 16, 208).

2

As cited by , the article is Jens Warming (1911). “Om grundrente av fiskegrunde.” Nationaløkonomisk Tidsskrift 49: 499-505. English translation Peder Andersen (1983). “‘On rent of fishing grounds’: A translation of Jens Warming’s 1911 article, with an introduction,” trans. Peder Andersen and Kirsten Stentoft. History of Political Economy 15 (3) (Fall): 391-396.

3

noted that the word commons “is used for both the singular and plural forms.” They (2006) also noted that for the general term commons there is differentiation between a commons as a shared resource or resource system which is called common-pool resources and independent of particular property rights, and a commons as a property-rights regime which is called common property and is a legal regime, a jointly owned legal set of rights.

4

As cited by , Michelman’s 1982 article is Frank I. Michelman (1982). “Ethics, economics, and the law of property.” In Ethics, economics, and the law (NOMOS series - 24), ed. J. Roland Pennock and John W. Chapman. New York University Press.

5

For example, Adam Smith in his The Wealth of Nations noted that the commerce “which any nation can carry on by means of a river which does not break itself into any great number of branches or canals, and which runs into another territory before it reaches the sea, can never be very considerable; because it is always in the power of the nations who possess that other territory to obstruct the communication between the upper country and the sea” (: book 1, chapter 3, paragraph 8).

6

identified the mistake and reformulated the model.

7

For example, the profit maximization principle in neoclassical economics, which is adopted by the model, is not universally true, especially for human knowledge creation.

8

For example, wrote: “The NIMBY movement gets off to the wrong start when it claims ownership interests in property—my backyard’—that is owned by others… there is no way to fix the gridlock problem unless we narrow the definition of externality to exclude all of the various ills that now count as protectable harm.”

9

Heller (1998) defined anticommons property as “a property regime in which multiple owners hold effective rights of exclusion in a scarce resource.” The distinction between Michelman’s and Heller’s (1998) definition is important. The former can be understood as an open-access anticommons, which Robert C. Ellickson argued may be rare and for which a threshold requirement of “near simultaneous unanimous consent,” which will be nearly impossible to achieve, ensures that the property will not be used by anyone (Heller 1998). The latter can be understood as a limited-access anticommons, in which a limited group of owners have rights of exclusion and which Ellickson argued appears more often (See Heller 1998: 667, 668, 669, and note 218). In the commons/anticommons duality, it is obvious that an open-access anticommons and a limited-access anticommons correspond to an open-access commons and a limited-access commons respectively. , for example, mentioned the cases of “open access” and “a fixed number of users” for a commons.

10

Obviously, an anticommons in a close-knit community is a limited-access anticommons.

11

Coloma (2003) pointed out that in fact the tragedy of the commons does not exist in Buchanan and Yoon’s (2000) model aimed at illustrating both the commons tragedy and the anticommons tragedy, because their model does not include any cost function. Instead, model introduces a cost function for each owner (user) such that each owner’s (user’s) private marginal cost is lower than the social marginal cost, which represents the reciprocal externality among the owners (users) that creates the tragedy of the commons.

12

Therefore, argument that one of the reasons why the anticommons is not necessarily tragic is that efficient cooperation among multiple owners (excluders) in an anticommons could develop over time is not exactly tenable.

13

Figure 5.2 in Heller’s 2008 book, which comprises two pictures showing “[a] lone holdout in a Chinese project, March 2007” and “[t]he holdout, bulldozed, April 2007” respectively, is missing in the Chinese edition of the book (Heller 2008: 113, 234, 235; : 98-100). The holdout story in Chongqing, China behind the pictures was in the media spotlight in 2007.

14

In the commons context, on the one hand, single ownership will not eliminate underuse, if pervasive externalities are minor; on the other hand, even to the extent that in some circumstances single ownership may mitigate overuse of resources, the problem is that “most common property resources are vast” and it is not practical to privatize them (Pindyck and Rubinfeld 2001: 643). It may be practical to privatize the parking lot discussed in Buchanan and Yoon’s (2000) model and assign usage and exclusion rights to a single owner, but “the air and waters surrounding us cannot readily be fenced” and therefore single ownership is by no means a way of solving such commons tragedies as a massive extinction of species in the oceans of the world, water and air pollution, and overpopulation (or what Hardin called the tragedy of “the commons in breeding”) ().

15

I thank two of the reviewers of this article for their suggestion that I pay attention to this new version of capitalism. Douglas Kellner appeared to have coined the term “technocapitalism” in 1989 (Kellner 2003: 31; Shaw 2008: 26). According to Luis Suarez-Villa, technocapitalism is “a new form of capitalism that is heavily grounded on corporate power and its exploitation of technological creativity” (Suarez-Villa 2001, ).

16

wrote that “[t]he exploration of information and knowledge as commons is still in its early infancy. Nevertheless, the connection between ‘information’ in its various forms and ‘commons’ in its various forms has caught the attention of a wide range of scholars, artists, and activists. The ‘information-commons” movement emerged with striking suddenness. Before 1995, few thinkers saw the connection. It was around that time that we began to see a new usage of the concept of the ‘commons.’” They (2006) also wrote that “[i]n the mid-1990s, articles suddenly started appearing in various disciplines addressing some aspect of this new knowledge commons” and that “[t]he largest wave of ‘new-commons’ exploration appeared in the legal reviews.”

17

By contrast, Ostrom pointed out many cases in which governmentally imposed restrictions were counterproductive and central government intervention had created more chaos than order ().

18

Particularly, locally evolved institutional arrangements governed by stable communities often fail when rapid change occurs (Dietz, Ostrom, and Stern 2003), and the cooperative mechanisms which have been proven successful in small-scale, local commons may break down if they are employed to solve the problems of larger and even global commons, such as critical problems of transboundary pollution, tropical deforestation, and climate change (Heller 2008: 25; RSAS 2009; Dietz, Ostrom, and Stern, 2003; ).

19

For citizens of a particular country, SOEs are something like what Aristotle described as property “belonging to them, not severally but collectively,” and the mainstream economists seem to consider the SOE dilemma as similar to the situation in which, as Aristotle described, “[e]ach citizen will have a thousand sons who will not be his sons individually but anybody will be equally the son of anybody, and will therefore be neglected by all alike” (Aristotle n.d.: book 2). Heller (2008: 34) argued that “[i]n recent years, state property has become less central as a theoretical category” and that “[i]n a sense, state property has lost its special character.” But, so far as I know, that is not the case at least in China, the world’s most populous country and second largest economy, and outside China, at least the World Bank has not become less interested in the state property in China (for example, Wei 2012; Flanagan 2012; Back 2012). For my opinion on the SOEs in China, see .

20

Once again, I thank two of the reviewers of this article for their respective suggestions that I pay attention to the related works of Joseph Stiglitz and David Harvey.

21

In sequential model, in which there is an industry consisting of two (ex ante symmetric) firms, and for each invention a firm’s cost of R&D is either C = c (with probability q) or C = 0 (with probability 1 − q) (here the smaller realization was chosen by them to be zero merely for analytic convenience and they noted that all the results hold with a positive lower cost), the sequentiality of innovation is represented by assuming that there is an infinite sequence of potential inventions (indexed by t = 1, 2, …), each of which has direct social value v drawn from c, d, f, F(v), and that “if invention t has not yet been discovered, then there is no chance that innovation t + 1 will be developed,” and the complementarity of innovation is represented by assuming that p₁, “the probability that innovation t + 1 is discovered conditional on the current invention t having already been discovered,” if just one firm undertakes R&D, is smaller than p₂, the corresponding conditional probability that at least one firm will discover innovation t + 1, if both firms undertake R&D.

22

sequential model showed that in a regime with patent protection, $v_{. 5}^{00}$ {= [1 – 2q(1 – q)p₁ – (1 – q)² p₂]c / [qp₁ + ½ (1 – q)p₂]}, which represents that if neither firm yet has a patent, the aggressive firm 1 will invest in R&D if its cost is c and v > $v_{. 5}^{00}$ , is less than $v_{. 75}^{00}$ {= [1 – 2q(1 – q)p₁ – (1 – q)² p₂]c / (½ p₂)}, which represents that if neither firm yet has a patent, the passive firm 2 will also invest in R&D if its cost is c and v > $v_{. 75}^{00}$ , and the model also showed that $v_{. 75}^{00}$ is less than $v_{1.5}^{00}$ {= [1 – 2q(1 – q)p₁ – (1 – q)² p₂]c / [qp₁ + (1 – q)(p₂ – p₁)]}, which represents that a firm with a patent will invest in R&D with a cost of c if v > $v_{1.5}^{00}$ , provided that q is sufficiently small.

23

proved Proposition 7 that “[i]f the Upper Tail Condition holds for $\bar{v}$ sufficiently big and k sufficiently small, then there exists $\bar{q}$ > 0 such that expected net social welfare in the dynamic model is higher in equilibrium without patent protection than in equilibrium with such protection provided that q < $\bar{q}$ ” and particularly noted that this result holds even for small, but positive values of s, the proportion of a firm’s gross revenue in the total value v when the firm is successful in making the discovery and there is no patent protection.

24

emphasized that the concept of “copyright” connected with these heterodox conclusions “refers to copyright sensu stricto, which comprises a bundle of economic rights in the artistic or literary work as focused on by the common law tradition and basically does not include moral rights of the author.”

25

As pointed out, knowledge in a knowledge commons is “a universal public good”: “the more quality information, the greater the public good.”

26

\frac{\partial f}{\partial s} = a \frac{\partial f}{\partial d} (- 2) - b \frac{\partial g}{\partial v_{2}^{000}} \frac{c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}} (- 1) \frac{1}{s^{2}} = - 2 a \frac{\partial f}{\partial d} + \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{2} (p_{2} - p_{1})} \frac{\partial g}{\partial v_{2}^{000}} .

27

\begin{array}{l} \frac{\partial^{2} F}{\partial s^{2}} = - 2 a \frac{\partial^{2} f}{\partial d^{2}} (- 2) + \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{2} (p_{2} - p_{1})} \frac{\partial^{2} g}{\partial v_{2}^{000^{2}}} \frac{c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}} (- 1) \frac{1}{s^{2}} + \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{(p_{2} - p_{1})} (- 2) \\ \frac{1}{s^{3}} \frac{\partial g}{\partial v_{2}^{000}} = 4 a \frac{\partial^{2} f}{\partial d^{2}} - \frac{b c^{2} {[1 - p_{2} + q (p_{2} - p_{1})]}^{2}}{s^{4} {(p_{2} - p_{1})}^{2}} \frac{\partial^{2} g}{\partial v_{2}^{000^{2}}} - \frac{2 b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{3} (p_{2} - p_{1})} \frac{\partial g}{\partial v_{2}^{000}} < 0 . \end{array}

28

\frac{\partial F}{\partial s} = - 2 a - \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}} (- 1) \frac{1}{s^{2}} = - 2 a + \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{2} (p_{2} - p_{1})} .

29

\frac{\partial^{2} F}{\partial s^{2}} = \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}} (- 2) \frac{1}{s^{3}} = - \frac{2 b c [1 - p_{2} + q (p_{2} - p_{1})]}{s^{3} (p_{2} - p_{1})} < 0 .

30

\begin{array}{l} F_{\max} = F (\bar{s}) = F (\sqrt{\frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{2 a (p_{2} - p_{1})}}) = a {1 - 2 \sqrt{\frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{2 a (p_{2} - p_{1})}}} \\ - \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{\sqrt{\frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{2 a (p_{2} - p_{1})}} \cdot (p_{2} - p_{1})} = a - \sqrt{\frac{2 a b c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}}} - \frac{b c [1 - p_{2} + q (p_{2} - p_{1})]}{p_{2} - p_{1}} \sqrt{\frac{2 a (p_{2} - p_{1})}{b c [1 - p_{2} + q (p_{2} - p_{1})]}} . \end{array}

31

Benkler wrote that “production is ‘commons-based’ when no one uses exclusive rights to organize effort or capture its value, and when cooperation is achieved through social mechanisms other than price signals or managerial directions,” that “[l]arge-scale instances of such cooperation are ‘peer production,’” and that “[f]ree software is the paradigm of commons-based production, as is the Linux kernel for peer production” (Benkler 2004; : note 12).

32

See http://en.wikipedia.org/wiki/Academic_Spring (accessed on March 10, 2013), http://thecostofknowledge.com/ (accessed on March 10, 2013), and (accessed on March 10, 2013).

Author Biography

Yi Zhou is an associate professor of Political Economy in the Department of Economics at Fudan University, Shanghai, China. He received his PhD in Economics at Fudan University. He was a Visiting Fellow in the Department of Economics at Harvard University, September 2003-July 2004. He has written or published many heterodox economics articles and essays (mostly in Chinese), and a heterodox book, including “The state-owned economy: Hope & fear” (in Chinese, 2009), A challenge to the intellectual property rights: An economic study of the free software movement (book, in Chinese, 2010), and “Against intellectual monopoly: Free software in China” (in English, 2011).

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