Funding a Revolution Government Support for Computing Research (1999) / Chapter Skim
Currently Skimming:
2 Economic Perspectives on Public Support for Research
2 Economic Perspectives on Public Support for Research
Pages 40-51
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 40... ...
The first section notes a number of serious theoretical objections that can be raised against public support of R&D, and it reviews empirical considerations that reaffirm the general presumption that, without government support, market failures will result in too few resources being allocated to expanding scientific and technological knowledge. The second section takes up the special considerations that bear on the economic case for public support of exploratory, open research the sort that is usually designated as basic science, however unsatisfactory that label may be.
|
From page 41... ...
Thomas Jefferson remarked upon this attribute, which permits the same knowledge to be used jointly by many individuals at once: "He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine receives light without darkening me...." Economists have pointed out that the potential value of an idea to any individual buyer generally would not match its value to the social whole. The latter value, however, is not readily expressed in a willingness to pay on the part of all who would gain from the illuminating idea.
|
From page 42... ...
But competitive market processes will not do an efficient job of allocating resources for producing and distributing pure public goods, because such markets work well when the incremental costs and benefits of using a commodity are assigned to the users. Capturing the Benefits of Research Investments One may see the problem posed by the public goods characteristics of knowledge by asking how ideas can be traded in competitive markets, except by having aspects of their nature and significance disclosed before the transactions are consummated.
|
From page 43... ...
Technical standards acquire economic value for their possessors only as a consequence of being publicly disclosed and jointly used, and they actually grow in utility for the individual user in proportion to the degree of universality in their adoption. Many technological and engineering reference standards, such as those for the thread sizes of nuts and bolts, or the diameter of optical fiber (to permit splicing without degrading the light signal that is propagated through the inner core)
|
From page 44... ...
On the supposition that extensive secrecy was a viable policy for firms engaged in research, what is the potential for wasting R&D resources by duplicating research, not to mention potential injury to consumers, were the developers of new products and processes actually able to maintain indefinite secrecy about their research results? The economic logic of providing intellectual property rights in science and technology is that this is a better choice, from the societal standpoint, than secrecy.
|
From page 45... ...
The rivalries for certain prescription drug markets in the pharmaceutical industry often are cited as a classic manifestation of this problem: billions are spent to develop the next blockbuster therapy, whereas little investment may be devoted to products of lesser commercial value. Racing behavior is another form of duplicative investment and is driven by the desire to beat one's rival to market.
|
From page 46... ...
The economic case for public funding of what is commonly referred to as basic research rests mainly on that insight, and on the observation that business firms are bound to be considerably discouraged by the greater uncertainties surrounding investment in fundamental, exploratory inquiries (compared to commercially targeted R&D) , as well as by the difficulties of forecasting when and how such outlays will generate a satisfactory rate of return.
|
From page 47... ...
Their motives for this range from developing a capability to monitor progress at the frontiers of science, to identifying ideas for potential lines of innovation that may be emerging from the research of others, to being better positioned to penetrate the secrets of their rivals' technological practices (Nelson, 1990~. Nevertheless, funding research is a long-term strategy, and therefore sensitive to commercial pressures to shift research resources toward advancing existing product development and improving existing processes, rather than searching for future technological options.
|
From page 48... ...
The experience of the 20th century also testifies to the many contributions of practical value that trace their origins to large, government-funded research projects that were focused upon developing new enabling technologies for public-mission agencies (Rosenberg, 1987~. Consider just a few recent examples from the enormous and diverse range that could be noted in this connection: airline reservation systems, packet switching and the Internet communication protocols, the Global Positioning System, and computer simulation methods for visualization of molecular structures.
|
From page 49... ...
The central point that must be emphasized here is that, over the long run, the fundamental knowledge and practical techniques developed in the pursuit of basic science serve to keep applied R&D as profitable an investment for the firms in many industries as it has proved to be, especially during the past half-century. In this role, modern science continues in the tradition of the precious, if sometimes imprecise, maps that guided parties of exploration in earlier eras of discovery, and in that of the geological surveys that are still of such value to prospectors searching for buried mineral wealth.
|
From page 50... ...
But, being possessed by individuals who have an interest in capturing some of the value of the expertise they have acquired, this tacit knowledge is transmitted typically through personal consultations, demonstrations, and the movement of people among institutions. The circulation of postdoctoral students among university research laboratories, between universities and specialized research institutes, and, no less important, the movement of newly trained researchers from the academy into industrial research organizations, are therefore important aspects of technology transfer diffusing the latest techniques of science and engineering research.
|
From page 51... ...
For this reason, big science projects or long-running public research programs may offer particular advantages for the collaborative mode of technology transfers, just as major industrial producers such as the large automotive companies in lapan are seen to be able to set manufacturing standards and provide the necessary technical expertise to enable their suppliers to meet them. By contrast, the transfer of technology by licensing intellectual property is, in the case of process technologies, far more subject to tensions and deficiencies arising from the absence of complete alignment of the interests of the involved individuals and organizations.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.