Against Intellectual Monopoly

mutual friend of ours insistently and reasonably argues.

    These may seem strange examples, but they are not: they are examples
of ideas that, at least in principle, should spread fast and costlessly, as all
they require is learning by looking. That most technologies do not spread
all that fast - why are people in rural China or in large areas of Italy still
not using wireless Internet? - is not surprising, as they require lots of
human and physical capital, which are costly to accumulate. But why is the
bidet not widespread in the United States, and why are the kitchen sinks of
most European houses not equipped with a garbage disposal? Thousands
of examples of "costless" ideas spreading painfully slow cast serious doubts
on the alleged commonness of imitative externalities. Why is it taking so
long for economists to realize that intellectual monopoly is a needless evil?
    As for the other two questions, they either did not ask them or their
answers were ambiguous. Arrow, for example, clearly thought that "yes" was
the right answer to the second question, on the size of the externality, but
that public support for research and innovation was the solution, thereby
answering the third question in the negative. These are indeed complex
questions, which can be seriously addressed only with substantial patience;
no quick and ready answer is available. We will try to address the first
and second questions here, while the last chapter tentatively addresses the
third question and the policies we believe would result in socially beneficial
outcomes.
The Imitative Externality
    It is certainly true that imitation is everywhere, from sports to business, from
dancing to dressing, from driving to singing. In fact, imitation is at the heart
of competitive behavior and of almost any kind of social interaction. Like
the fixed cost-cum-marginal cost argument that, as we pointed out earlier,
is so powerful that it can be applied to any and every thing, imitation is so
widespread that, when taken literally, it is also everywhere. By this token, one
should see unpriced externalities in every market where producers imitate
one another, and thereby conclude that all kinds of economic activities
should be allowed some form of monopoly power. Restaurants imitate one
another, as coffee shops, athletes, real estate agents, car salespeople, and
even bricklayers do, but we would certainly find it crazy to attribute to a
firm in each of these businesses a monopoly power on one technique or
another. This suggests that equating imitation with unpriced externalities leads us into a dark night in which all cows are gray; this is not a pleasant
situation; hence, we better turn on a few lights.

    Although the view that ideas, once discovered, can be imitated for free by
anybody is pervasive, it is far from the truth. Although it may occasionally
be the case that an idea is acquired at no cost, ideas are generally difficult
to communicate, and the resources for doing so are limited. It is rather
ironic that a group of economists, who are also college professors and earn
a substantial living teaching old ideas because their transmission is neither
simple nor cheap, would argue otherwise in their scientific work. Most of
the time imitation requires effort and, what is more important, imitation
requires purchasing either some products or some teaching services from
the original innovator, meaning that most spillovers are priced.
    There are certainly informational spillovers as ideas move from person
to person, but it is hard to see why in most instances they are not priced.
Although it is possible to imagine examples such as the wheelbarrow where
an idea cannot be used without revealing the secret, relatively few ideas are
of this type. For copyrightable creations such as books, music, plays, movies,
and art, unpriced spillovers obviously play little role. A book, a CD, or a
work of art must be purchased before it can be used, and the creator is free
to make use of his creation in the privacy of his home without revealing the
secret to the public at large - similarly with movies or plays. In all cases, the
creation must effectively be purchased before the "secret" is revealed.
    In the case of patentable ideas such as the wheelbarrow, the idea of
unpriced spillovers is more plausible. Yet there is no reason to believe that
it is of practical importance. Indeed, there is a modern example of the
wheelbarrow