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4 Data From Publicly Funded Research--The Economic Perspective
Pages 110-131

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From page 110...
... Sensing systems (e.g., Earth observation satellites, the Hubble Space Telescope, ground-based radars) and other forms of automated data generation (e.g., genome studies)
From page 111...
... Budget pressures, plus the evident success of market economies, have led many governments to privatize activities previously delivered via the public sector, in hopes of relieving the burden on taxpayers while improving the allocation of economic resources. These pressures have begun to be felt in the area of scientific data; for example, in the United States, Landsat remote sensing was privatized in the mid- 1980s, and some European countries have strongly urged limits on the sharing of meteorological and other data in order to protect the data markets for their government monopolies.
From page 113...
... scientific research is tightly tied to the collection, maintenance, and distribution of the data generated from the research. For example, the Hubble Space Telescope (MST)
From page 114...
... DETERMINANTS OF THE STRUCTURE OF SCIENTIFIC DATA DISTRIBUTION How best to distribute scientific data depends on several economic properties of the underlying science and scientific community that both generates and
From page 115...
... Does the scientific research depend on a substantial public investment in one or more facilities that generate the data of interest? The Hubble Space Telescope is a clear example of a single costly facility, the sole purpose of which is to generate basic scientific data for its useful life.
From page 116...
... · Is the user community large enough to support more than one data distributor? In many cases, a particular scientific data set is likely to be of interest to only a few scientists and practitioners, and a privates market may support only one distributor, due to scale economies.8 In such cases, privatizing data distribution will result in a private monopoly with no incentive to support the public interest, replacing a public monopoly that does have such a commitment.
From page 117...
... 117 ~ca O .
From page 118...
... 118 ~ca O .
From page 120...
... The committee lists below some necessary conditions for the complete privatization of scientific data distribution to be an appropriate option: · Can the distribution of data be separated easilyfrom their generation? For the HST, the answer is "no"; for the Human Genome Project, the answer is likely "yes." · Is the scientific data set used by others beyond the research community?
From page 121...
... If all these questions can be answered "yes," then privatizing the distribution of scientific data should be an option to be considered. Privatizing data distribution might appear to be attractive to a budget-constrained government agency.
From page 124...
... PRICING PUBLICLY FUNDED SCIENTIFIC DATA Ramsey pricing is a mechanism developed for regulated monopolies, which in this context mean either government monopolies or monopolies acting as agents of the government. It was long ago proved by the British mathematician, Frank Ramsey, that where the optimal price for a good is zero or is insufficiently high to pay for the total cost of the product, economic efficiency requires the shortfall to be covered by differential prices, with the highest prices charged to users with low elasticity of demand, that is, users whose usage will be reduced relatively little by a given charge for the item.
From page 125...
... The two appropriate pricing methods, incremental and marginal cost pricing, differ as follows: . Incremental cost pricing.
From page 126...
... Circular A-130,3 which applies to all federal government agencies, corresponds to incremental cost pricing. The tradition in the research community, and the pricing level indicated by the "full and open access" policy, corresponds to marginal cost pricing.
From page 127...
... Prior to the popularity of the World Wide Web, the fairly low level of usage imposed on the Internet by scientists was well within the modest capacities of the network to function without discernible delay. Scientific users perceived the network as having no capacity constraints, because they never encountered any.
From page 128...
... In the long run, however, the "partnership" model of the past is unlikely to provide sufficient incentives to alleviate congestion, and the current situation can be interpreted as a transition to a new regime in which more formal mechanisms, such as congestion pricing, will be required. RECOMMENDATIONS REGARDING ECONOMIC ASPECTS OF SCIENTIFIC DATA The committee recommends that the economic aspects of facilities for storage and distribution of scientific data generated by publicly funded research be evaluated according to the following criteria: · Does the scientific research depend on a substantial public investment in one or more facilities that generate the data of interest?
From page 129...
... The appropriate price ceiling for nonscientific users of scientific data generated through government research is incremental cost, as defined in the section above titled "Pricing Publicly Funded Scientific Data." The price of scientific data to the contributing scientific community should be zero, or at most marginal cost.
From page 130...
... 6. A more extensive introduction to the complex topic of price discrimination/product differentiation is contained in the section "Pricing Publicly Funded Scientific Data," below.
From page 131...
... 15. The current situation on the North Atlantic route is that there is virtually no congestion for placing telephone calls from Europe to the United States, but serious congestion for Internet traffic.


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