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4. The Economic Logic of “Open Science” and the Balance between Private Property Rights and the Public Domain in Scientific Data and Information: A Primer
Pages 19-34

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From page 19...
... As a mode of generating reliable knowledge, open science depends upon a specific non-market reward system to solve a number of resource allocation problems that have their origins in the particular characteristics of information as an economic good. There are features of the collegiate reputational reward system conventionally associated with open science practice in the academy and public research institutes that create conflicts between the ostensible norms of "cooperation" and the incentives for non-cooperative, rivalrous behavior on the part of individuals and research units who race to establish "priority." These sources of inefficiency notwithstanding, open science is properly regarded as uniquely well suited to the goal of maximizing the rate of growth of the stock of reliable knowledge.
From page 20...
... Nevertheless, it follows from the nature of pure public goods that competitive market processes will not do an efficient job of allocating resources for their production and distribution, simply because where such markets work well they do so because the incremental costs and benefits of using a commodity are assigned to the users. In the case of public goods, such assignments are not automatic and they are especially difficult to arrange under conditions of competition.
From page 21...
... THE ECONOMIC LOGIC OF OPEN SCIENCE For the purposes of this basic exposition, the institutional conditions of primary interest are those that sharply distinguish the sphere of open science supported by public funding and the patronage of private foundations, on the one hand, from both the organized conduct of scientific research under for commercial profit under "proprietary rules," and the production and procurement of defense-related scientific and engineering knowledge under conditions of restricted access to information about basic findings and their actual and potential applications. Ethos, Norms, and Institutions of "the Republic of Science" The formal institutions of modern science are ones with which academic economists already are thoroughly familiar, for, it is a striking phenomenon in the sociology of science that there is high degree of mimetic professional organization across the various fields of academic endeavor.
From page 22...
... The fixed part of the compensation package, e.g., a basic stipend or salary, tied to teaching in the case of academic research institutions, provides individual researchers a measure of protection against the large inherent uncertainties surrounding the process of exploratory science. The variable component of the reward is based upon expert evaluation of the scientific significance of the individual' s contributions to the stock of knowledge.
From page 23...
... It follows from this logic that such policies need to attend to the delineation of intellectual property rights and protections of the public domain in scientific data and information as the respective codified knowledge infrastructures of the dual regimes, and to the maintenance of balance between them. To do so will be easier if there is a clearer understanding of the ways in which public expenditures for the support of open science serve to enhance the value of commercially oriented R&D as a socially productive and privately profitable form of investment.
From page 24...
... Consider just a few recent examples from the enormous and diverse range that could be instanced in this connection: airline reservation systems, packet switching for high-speed telephone traffic, the Internet communication protocols, the Global Positioning System, and computer simulation methods for visualization of molecular structures which has been transforming the business of designing new pharmaceutical products, and much else besides. Occasionally, such new additions to the stock of scientific knowledge are immediately commercializable and yield major economic payoffs that, even though few and far between, are potent enough to raise the average social rate of return on basic, academic research well above the corresponding private rate of return earned on industrial R&D investment.
From page 25...
... Gerald Holton (1996) , a physicist at Harvard and historian of science, has remarked that if intellectual property laws required all photoelectric devices to display a label describing their origins, "it would list prominently: 'Einstein, Annalen der Physik 17~1905)
From page 26...
... Moreover, business support for academic-style R&D as distinguished from industrial contracting for university-based, applications-oriented research with intellectual property rights assigned to the sponsoring firms is more likely to commend itself as a long-term strategy. Consequently, it is likely to be sensitive to commercial pressures to shift research resources towards advancing existing product development, and improving existing processes, rather than searching for future technological options.
From page 27...
... The consequent imposition of data and information access charges above the marginal costs of producing and distributing information results in a double burden of economic inefficiency when it falls upon researchers who use those information-goods as inputs in the production of more information and knowledge. The first-order effect is the curtailment of the use of the information, or the increased cost of using it to produce conventional commodities and services, and hence the loss of utility derived from such products by consumers.
From page 28...
... So there is an important economic rationale for establishing intellectual property rights. A strong case also can be made for protecting such rights by the grant of patents and copyrights, especially as that way of providing market incentives for certain kinds of creative effort leaves the valuation of the intellectual production to be determined ex post, by the willingness of users to pay; it thereby avoids having society try to place a value on the creative work ex ante, as would be required under alternative incentive schemes, such as offering prospective authors and inventors prizes or awarding individual procurement contracts for specified works.
From page 29...
... Today, the hot issues arise from questions concerning the desirability of (a) curtailing patent monopolists' rights by letting governments impose compulsory licensing of the local manufacture of certain pharmaceutical products, or of some medical devices; (b)
From page 30...
... They involve special problems of access to scientific and technological knowledge relevant to developing countries, and raise complex issues of what it implies for resource allocation to insist that every individual in a society has a right to benefit from the collective advance of human knowledge affecting such fundamental, capability enhancing conditions as health and education. A delicate attempt at regaining a better balance between protection of the public domain of knowledge from further encroachments by the domain of private property rights, is needed at least in regard to some sectors where services are recognized to profoundly affect human well-being (e.g., health, education)
From page 31...
... Their methodology was the survey of participants in business and academic research organizations, and the thrust of their findings was that while there were a few isolated instances of serious difficulties in working out the IPR arrangements among firms, and between firms and universities, their interviews disclosed nothing resembling a "tragedy." Rather more serious reservations were sounded, however, regarding the impediments to research discoveries that might be caused by the patenting of fundamental research tools, an issue that Walsh, Arora, and Cohen treated as distinct from that of the anti-commons effect even though Eisenberg (2001) evidently regards the two as closely related.
From page 32...
... Note that I use "utility" to cover both projects with lower expected rates of return, and those where there is higher intrinsic technical or commercial risk (in the sense of higher variance relative to the expected rate of return)
From page 33...
... Although in the case of ordinary, physically embodied commodities there is a theoretical presupposition that competitive markets and well-defined private property rights can support a socially-optimal equilibrium in the allocation of resources, that presumption ceases to hold in the realm of information and knowledge. CONCLUSION The elision effected by the application of the metaphor of "property" to the domain of ideas has been fruitful in many regards.
From page 34...
... 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, 67.


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