Re: poly: Modeling Economic Singularities

Nick Bostrom writes:
>You argue that in the absense of effective property rights most
>of the return above the market return should be burned up in a race
>to be first to explore new investment projects. It seems to me that
>the absense of property rights often have the opposite effect. ...
>In general, the benefits of technolgical projects are seldom 100%
>excludable. Especially in the absense of property rights, competitors
>will imitate. This creates a disincentive to invest in research and
>innovation. The result would seem to be the opposite of a
>crazy research-race to be first. An innovation would be delayed until
>the general level of technology has risen to a level where the cost
>of development is sufficiently small.

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.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614
Received on Tue Apr 21 16:20:41 1998