Re: poly: Modeling Economic Singularities

From: Nick Bostrom <>
Date: Tue Apr 21 1998 - 18:31:01 PDT

Robin Hanson wrote:

> The lack of property rights can *both* result in too few projects, and
> in the projects that are done being done too early.
> A research project has a private return and a social return. With
> positive net externality, the social return is larger, and so if the
> private return is too low, the project may never be undertaken, even
> though the social return may have been very high.
> If the project is ever undertaken, however, the expected private return
> won't be above the market private return, if enough competitors can do
> the project. This is due to the race I talked about.

But even with property rights (i.e. patents), the typical investor
who sets out to develop a new product can't expect a return
substantially above the market return, can he? As you say:"while one
group now has the right to make the next Batman movie sequel, there
have long been open contests to create popular movie series, and
popular comic strips."

In what way does the presence or absence of property rights make a
difference to the growth of the total amount of value that the world
contains? I understand that property rights can internalize a
fraction of the socially beneficial effects or research and
innovation, by granting people a temporary monopoly on the
products they have developed. This should boost growth, since it
gives people an added incentive to do R&D. (It has even been
hypothesized that the rapid economic growth in the last century or
twowas caused by the introduction of patent rights.) Are you
saying that in addition to this effect there is another effect,
namely that property rights prevent investors from engaging in a race
to first in which they burn up excess returns? If so, are these
wasted excess returns only their private returns, or does it adversly
affect society as a whole. (If it does not adversly affect society as
a whole, how can it prevent rapid growth in what you call the low
demand mode?)

Nick Bostrom
Department of Philosophy, Logic and Scientific Method
London School of Economics
Received on Wed Apr 22 00:52:10 1998

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