Tragedy of the Anti-Commons

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= the excessive fragmentation of property rights preventing transactions from taking place


Definition

"In contrast to the tragedy of the commons, when a public resource is overused because there is no one owner to regulate it, a tragedy of the anticommons occurs when a resource is underused because it has been divided up by a number of owners who may not be willing to agree or cooperate with one another." (http://www.gene-watch.org/genewatch/articles/18-1Hope.html)

See also the related entry on the Tragedy of the Non-Commons


Description

James Surowiecky:

"We hear a lot about the “tragedy of the commons”: if a valuable asset (a grazing field, say) is held in common, each individual will try to exploit as much of it as possible. Villagers will send all their cows out to graze at the same time, and soon the field will be useless. When there’s no ownership, the pursuit of individual self-interest can make everyone worse off. But Heller shows that having too much ownership creates its own problems. If too many people own individual parts of a valuable asset, it’s easy to end up with gridlock, since any one person can simply veto the use of the asset.

The commons leads to overuse and destruction; the anticommons leads to underuse and waste. In the cultural sphere, ever tighter restrictions on copyright and fair use limit artists’ abilities to sample and build on older works of art. In biotechnology, the explosion of patenting over the past twenty-five years—particularly efforts to patent things like gene fragments—may be retarding drug development, by making it hard to create a new drug without licensing myriad previous patents. Even divided land ownership can have unforeseen consequences. Wind power, for instance, could reliably supply up to twenty per cent of America’s energy needs—but only if new transmission lines were built, allowing the efficient movement of power from the places where it’s generated to the places where it’s consumed. Don’t count on that happening anytime soon. Most of the land that the grid would pass through is owned by individuals, and nobody wants power lines running through his back yard.

The point isn’t that private property is a bad thing, or that the state should be able to run roughshod over the rights of individual owners. Property rights (including patents) are essential to economic growth, providing incentives to innovate and invest. But property rights need to be limited to be effective. The more we divide common resources like science and culture into small, fenced-off lots, Heller shows, the more difficult we make it for people to do business and to build something new. Innovation, investment, and growth end up being stifled." (http://www.newyorker.com/talk/financial/2008/08/11/080811ta_talk_surowiecki)


Context

From the Wikipedia, about the history of the concept:

"The term "tragedy of the anticommons" was originally coined in a 1998 Harvard Law Review article by Michael Heller, a professor at Columbia Law School. In a 1998 article in Science, Heller, along with Rebecca Eisenberg, pointed to biomedical research as one of the key areas where competing patent rights could actually prevent useful and affordable products from reaching the marketplace. Too many property rights can lead to too little innovation. The countereffect of the tragedy of the anticommons, the increased usefulness of a resource as the result of many individuals using it, has been dubbed the "Comedy of the Commons" by Carol M. Rose in a 1987 article that appeared in the University of Chicago Law Review. (http://en.wikipedia.org/wiki/Tragedy_of_the_anticommons)

Source: The Tragedy of the Anticommons: Property in the Transition from Marx to Markets. Davidson Institute Research Workshop on the Economics of Transition and Harvard Law Review, Volume 111 (3) (pp. 621-688). By Heller, Michael.

Summary of the Original Text

By the Cooperation Commons at http://www.cooperationcommons.com/node/412

"Findings

  • An Anticommons Property is a scarce resource in which multiple owners have the right to individually exclude others from its use, and no one has an effective privilege of use. Stalemate results in the tragedy of the anticommons, the underuse of a property.
  • Anticommons property appears when new property rights are being defined and allocated without mechanisms for resolving ownership disputes, notably in economies making a transition from state to private control.
  • A tragedy of the anticommons results when property theorists and implementers of property redistribution in transitional societies focus unduly on the clarity of rights (who is entitled to a share) while giving short shrift to the content of useful property bundles.
  • Once an anticommons property appears, it is difficult to convert it into useful private property either through market means or subsequent regulation due to transaction costs, holdouts, and individual attempts to extract the greatest return. Informal mechanisms of dubious legality sometimes fill the gaps.
  • The notion of the anticommons has implications for the distribution of environmental and intellectual property rights.

Anticommons property is defined to be a class of property in analogy to the commons in classical economic literature to explain some of the failures and difficulties in the transition from communist to market economies. Multiple owners have privileges in a resource in a commons. The overuse of that resource has been described, notably by Hardin, as the tragedy of the commons. Heller defines an anticommons property as a scarce resource in which multiple owners have the right to individually exclude others from its use, and no one has an effective privilege of use. Stalemate results in the , the underuse of a property.

Heller examines a paradox in Moscow after the dissolution of the Soviet Union. Storefronts remained empty even though the economy was growing and there was demand for consumer goods. In contrast, street kiosks in front of them filled with goods and customers.

He maintains that the phenomenon is due to a tragedy of the anticommons, an underuse of scarce resources due to the allocation of multiple new owners with the rights to exclude others from its use.

He compares the distribution of rights in commercial property (previously owned by the state with overlapping bureaucratic stakes) with other types of properties (e.g., individual apartments, communal apartments, and street kiosks.) In the latter cases, sometimes legal but more often brutally questionable means of resolving rights disputes results in more widespread use of resources in the absence of appropriate legal recourse.

While Heller devotes most of his attention to the underuse of commercial property in Moscow and other cities in the former Soviet Union, the notion of the anticommons has implications in the distribution of environmental and intellectual property rights.

Anticommons property may emerge in developed markets wherever new property rights are being defined. This can occur when new technologies make possible uses of, for example, intellectual property and environmental rights, unanticipated by the previously existing legal mechanism.

Once anticommons property appears, it is difficult to remedy the situation either through markets or subsequent regulation. Rather, Heller argues that care must be taken to avoid the accidental creation of anticommons property when new property rights are being defined by conveying core bundles of rights rather than multiple rights of exclusion." (http://www.cooperationcommons.com/node/412)


Examples

Steve Webber on the "the tragedy of the anti-commons.

" Let's say I'm a researcher working at a small biotech firm here in the Bay Area. And I think there's something interesting I would like to do with a particular molecule and its interaction with a particular gene. Much of this stuff is now patented, and there are so many competing patent claims on so many different parts of the things I would need to work on, that the cost of actually figuring out what permissions I need are astronomical. So lots of small companies simply can't work on it.

They call it the tragedy of the anti-commons in the sense that in order to work on this, they've got to get a permission to use this molecule and a license to play with this gene. That's just too expensive, so they walk away from it. I don't have a quantitative model that can describe for you how much wasted effort or dead weight results from this problem. But I can tell you, there's a lot of anecdotal evidence. There are companies that patent gene sequences, knowing full well that these patents would never be upheld in court, because they haven't added any value. They also know full well that if a pharmaceutical company decides it wants to do something with that gene, it's more likely just to pay the company $150,000 or $200,000, rather than spend a year or 18 months fighting the patent in court. It's kind of tragic."


Janet Hope on the issues in Open Source Biotechnology:

"These mounting transaction costs can retard, and in some cases completely undermine, their scientific projects. Even if they are not prevented from pursuing research itself, institutions may find that the rights of other IP holders prevent them from commercializing the fruits of their labor.

In biomedicine, there are considerable social costs associated with working within this expensive proprietary system. These stem from the fact that such costs are beyond the resources of the smallest participants, or would-be participants, in the industry. Market forces will naturally tend to direct efforts by big private sector players to where there is the most substantial return on investment. This means research goals are inevitably being narrowed to those that will be most profitable, though not necessarily most useful. Thus, it is often not commercially worthwhile for the biomedical industry to devote significant resources to addressing medical or social needs, such as drugs for very common diseases like tuberculosis or malaria.

Similarly, in agriculture, breeding strategies will be oriented towards major crops in developed country markets, not towards finding genetic traits with characteristics that are useful to poor farmers. The last few years have also seen a series of mergers and acquisitions that have dramatically consolidated the industry, with a huge portion of fundamental research tools ending up in the hands of a tiny number of big multinationals. This level of industry concentration has inevitably led to the overpricing of technologies and the exclusion of innovative start-ups and public sector institutions. This, in turn, means that smaller firms can’t get a foot in the door." (http://www.gene-watch.org/genewatch/articles/18-1Hope.html)

More Information

  1. Property
  2. Nonrivalry
  3. Nonexcludability

Wiki entries

  1. See also the Tragedy of the Commons and the Tragedy of the Non-Commons
  2. Wikipedia article at http://en.wikipedia.org/wiki/Tragedy_of_the_anticommons


Print references

  1. Rose, Carol M. (1986) The Comedy of the Commons: Commerce, Custom and Inherently Public Property, 53 Univ. of Chi. L. Rev. 711 , reprinted as chapter 5 in: Rose, Carol M., Property and persuasion: Essays on the history, theory and rhetoric of ownership, Westview Press 1994
  2. Heller, M. A. (1998): "The Tragedy of the Anticommons" Harvard Law Review, January 1998.
  3. Heller, M. A. and Eisenberg, R.: Can Patents Deter Innovation? The Anticommons in Biomedical Research, Science 280, 5364 (1 May 1998)


Online material

  1. Essay: Michael Heller. The Tragedy of the Anticommons
  2. Podcast: Lawrence Lessig on the Comedy of the Commons


Key Book to Read

  1. Michael Heller. The Gridlock Economy.