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Information Economy Project

Tragedies of the Gridlock Economy: How Mis-Configuring Property Rights Stymies Social Efficiency

An Information Economy Project Conference - Friday, October 2, 2009, Arlington, Virginia

This event will explore a paradox that broadly affects the Information Economy. Property rights are essential to avoid a tragedy of the commons; defined properly, such institutions yield productive incentives for creation, conservation, discovery and cooperation. Applied improperly, however, such rights can produce confusion, wasteful rent-seeking, and a tragedy of the anti-commons. This conference, building on Columbia University law professor Michael Heller's book, The Gridlock Economy, tackles these themes through the lens of three distinct subjects: "patent thickets," reallocation of the TV band, and the Google Books copyright litigation.

Conference Agenda:

8:30 a.m. - The Debate Over the "Gridlock Economy"
This high-level morning session will set the stage for the panels that follow.
Michael Heller, Columbia Law School
Richard Epstein, Chicago/NYU Law Schools
Eric Claeys, George Mason University School of Law (Moderator)

10:45 a.m. - What is Left of "Patent Reform" after Recent Supreme Court Decisions?
The problem of "patent blocking" has been much noted, but how serious a problem has it been for practitioners of intellectual property? In a series of a half-dozen dozen decisions over the past three years, the Supreme Court has substantially pruned patent property rights, addressing the perceived patent thicket problem. Is this cause for concern or celebration?
Michael Meurer, Boston University School of Law
F. Scott Kieff, George Washington University. School of Law
Adam Mossoff, George Mason University School of Law (Moderator)

12:30 p.m. - Luncheon Keynote: Externalities, Commons, and Gridlocks
Harold Demsetz
, UCLA Department of Economics

1:30 p.m. - How to Salvage the TV Band "White Spaces?" License-exempt Rules v. Exclusive Ownership of Radio Spectrum as Alternative Property Regimes
This panel weighs in the optimal rights regime in wireless, in general, and with specific reference to the "mother lode" of productive bandwidth - the broadcast TV band.
Kevin Werbach, Wharton School, Department of Legal Studies
Thomas Hazlett, George Mason University School of Law
Gerald Faulhaber, Wharton and IEP (Moderator)

3:15 p.m. - Solutions for "Fair Use:" The Google Books Litigation as a Case Study
This panel considers essential efficiency trade-offs in copyright, with rules that promote socially valuable access to information while incentivizing creative investments. The lawsuit brought by publishers against Google Books, now settled, illustrates how mechanisms now in place may, or may not, provide balanced IP outcomes.
Douglas Lichtman, UCLA School of Law
Robert Merges, UC Berkeley School of Law
Chris Newman, George Mason University School of Law (Moderator)

4:45 p.m. - Social Hour

The Information Economy Project is proud to present articles that have been published in the Arizona Law Review, Volume 53, from the Tragedies of the Gridlock Economy: How Mis-Configuring Property Rights Stymies Social Efficiency held on October 2, 2009.

Conference Articles and Abstracts:

"Heller's Gridlock Economy In Perspective" by Richard A. Epstein, 53 Ariz. L. Rev. 51 (2011), October 2, 2009 (paper presented at the IEP Conference on the Gridlock Economy). "The topic of this conference is Michael Heller's provocative new book on The Gridlock Economy.1 The central thesis of the book is that one critical obstacle to overall social advancement is the fragmentation of property among private owners that prevents its coherent assembly for projects that are desired by all but achievable by none. There is no question that, more than anyone else, Heller has put this topic on the map in its current form, chiefly through two earlier academic articles which have had immense influence on the field.2 The ability to introduce into the mature field of law and economics even a single new generative term, the anticommons on which Gridlock is based, is a major intellectual achievement..."

"Exclusion and Exclusivity in Gridlock" by Eric R. Claeys, 53 Ariz. L. Rev. 9 (2011). "Michael Heller earned respect among property scholars in his 1998 article The Tragedy of the Anticommons: Property in the Transition from Marx to Markets. The conception of a 'tragedy of the commons' had been popularized by Garrett Hardin in a 1968 article by that name. When ranchers have open access (a commons) to grass, their cattle tend to overeat it (the tragedy). Harold Demsetz provided the canonical economic response to tragedies of the commons: private property. Exclusive rights of control, use, and disposition ('exclusive possessory rights') encourage owners to internalize externalities associated with the over-consumption of resources held in common..."

Spectrum Policy:

"Tragedy T.V.: Rights Fragmentation and the Junk Band Problem" by Thomas W. Hazlett, 53 Ariz. L. Rev. 83 (2011), October 2, 2009 (paper presented at the IEP Conference on the Gridlock Economy). "Tragedy of the anti-commons occurs when property rules fail to enable efficient social coordination. In radio spectrum, rights issued to airwave users have traditionally been severely truncated, leaving gains from trade unexploited. The social losses that Ronald Coase (1959) asserted, appealing to basic theories of resource allocation, are now revealed via intense under-utilization of the TV Band..."

"The Wasteland: Anticommons, White Spaces, and the Fallacy of Spectrum" by Kevin Werbach, 53 Ariz. L. Rev. 213 (2011), October 2, 2009 (paper presented at the IEP Conference on the Gridlock Economy). "I urge you, I urge you to put the people's airwaves to the service of the people and the cause of freedom. You must help prepare a generation for great decisions. You must help a great nation fulfill its future. Do this! I pledge you our help."1 Federal Communications Commission (FCC) Chairman Newton Minow's 1961 address to the National Association of Broadcasters is legendary for its caustic dismissal of television as a "vast wasteland."2 Yet Minow intended to emphasize a different two-word phrase: "public interest."3 Television was the most prominent use of "the people's airwaves" - the government-defined capacity for wireless communication - and it was failing to serve national interests.4...

Google Book Search:

"Google Book Search in the Gridlock Economy" by Doug Lichtman, 53 Ariz. L. Rev. 131 (2011), October 2, 2009 (paper presented at the IEP Conference on the Gridlock Economy). "Michael Heller's Gridlock Economy popularizes a concept that Heller has developed over nearly two decades of influential academic writing: the notion that, when it comes to property rights, too many rights-endowed cooks really can spoil the broth. I was asked in this conference to apply Heller's insight to the Google Book Search project, and the request at first seemed natural. Heller himself has suggested that Google Book Search might be an apt poster child for the gridlock phenomenon; and Google likewise can often be heard to complain, in Heller-esque tones, that the only way to build a comprehensive search engine for books is to take the books without asking..."

"Autonomy and Independence: The Normative Face of Transaction Costs" by Robert P. Merges, 53 Ariz. L. Rev. 145 (2011), October 2, 2009 (paper presented at the IEP Conference on the Gridlock Economy). "Anticommons theory made a splash and is today being expanded and applied because it shifted our collective attention in a crucial way. Before the 1990's, the big policy questions in IP were all about individual IP rights: when should a copyright or patent be granted, when denied? Anticommons theory burst into this conventional conversation like an unruly drunk at a ballet recital. It demanded attention. It said, in effect, 'you may mean well, but you're missing the big point. You're wasting your time!' The big point is not the individual grant of an IP right. It's the aggregate impact of granting many rights to many discrete and independent right-holders..."

Luncheon Keynote:

"On Being Misled by Transaction Cost Economics: Externalities, Commons, and Gridlocks" by Harold Demsetz, 53 Ariz. L. Rev. 1 (2011), October 2, 2009 (paper presented at the IEP Conference on the Gridlock Economy). "During the last half-century transaction cost became a prominent consideration in discussions about externalities and ownership arrangements. The author of this essay contributed to this development in the earlier part of this half-century but has since come to doubt the importance of transaction cost and even the roles it is thought to play in these two areas of economic thought. A succinct statement of this doubt as it pertains to the externality problem is a primary task of this essay. The last part of the essay questions the dominant position given to transaction cost in discussions of ownership forms that now go by the names of commons, anti-commons, and gridlocks..."

Patent Reform:

"The Rise and Fall of the First Patent Thicket: The Sewing Machine War of the 1850's" by Adam Mossoff, 53 Ariz. L. Rev. 165 (2011), March 2010. "After Professor Michael Heller proposed that excessively fragmented property rights in land can frustrate its commercial development, patent scholars have debated vigorously whether Heller's anticommons theory applies to property rights in inventions. Do these 'patent thickets' exist, and if so, what are the best solutions? This article contributes to this debate by analyzing the rise and fall of the first American patent thicket: the 'Sewing Machine War' of the 1850's..."

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