domingo, fevereiro 23, 2003

Jabá, música, Levine, Solow e Quah: o que todos têm em comum?

Leonardo Monastério, meu colega neste site, em alguns posts passados (muito bons, como sempre), andou preocupado com a questão do mercado musical. Bem, aqui vai um link para leitura que talvez seja do agrado dele e dos que gostam desta discussão.

Creation Myths - Does innovation require intellectual property rights?

Antes que alguém pergunte o que música tem a ver com economia, eu lembraria o nome deste humilde blog e também alguns trechos do artigo citado:

In the 1950s Solow showed that technological change was a primary source of economic growth, but his models treated that change as a given determined by elements beyond pure economic forces. In the 1960s Kenneth Arrow, Karl Shell, and William Nordhaus analyzed the relationship between markets and technological change. They concluded that free markets might fail to bring about optimal levels of innovation.

In a landmark 1962 article, Arrow gave three reasons why perfect competition might fail to allocate resources optimally in the case of invention. "We expect a free enterprise economy to underinvest in invention and research (as compared with an ideal)," he wrote, "because it is risky, because the product can be appropriated only to a limited extent, and because of increasing returns in use."

Risk does seem a clear roadblock to investment in technological change. Will all the hours and dollars spent on research and development result in a profitable product? Is the payoff worth the risk? The uncertainty of success diminishes the desire to try. Much of Arrow’s article examines economic means of dealing with uncertainty, none of them completely successful.

The second problem, what economists call inappropriability, is the divergence between social and private benefit -- in this case, the difference between the benefit society would reap from an invention and the benefit reaped by the inventor. Will I try to invent the wheel if all humanity would benefit immeasurably from my invention but I’d get only $1,000? Maybe not. Property rights, well-defined, help address the issue.

The third obstacle is indivisibility. The problem here is that the act of invention involves a substantial upfront expenditure (of time or money) before a single unit of the song, formula, or book exists. But thereafter, copies can be made at a fraction of the cost. Such indivisibilities result in dramatically increasing returns to scale: If a $1 million investment in research and development results in just one unit of an invention, the prototype, a $2 million expenditure could result in the prototype plus thousands or millions of duplicates.

This is a great problem to have, but perfect competition doesn’t deal well with increasing returns to scale. With free markets and no barriers to entry, products are priced at their marginal cost (that is, the cost of the latest copy), and that price simply won’t cover the huge initial outlay -- that is, the large indivisibility that is necessary to create the prototype. Inventors will have no financial incentive for bringing their inventions to reality, and society will be denied the benefits.

Increasing returns therefore seem to argue for some form of monopoly, and in the late 1970s Joseph Stiglitz and Avinash Dixit developed a growth model of monopolistic competition -- that is, limited competition with increasing returns to scale. It’s a model in which many firms compete in a given market but none is strictly a price taker. (In other words, each has some ability to restrict output and raise prices, like a monopolist.) It’s a growth model, in other words, without perfect competition. The Dixit-Stiglitz model is widely used today, with the underlying assumption that economic growth requires technological change, which implies increasing returns, which means imperfect competition.

Stanford’s Paul Romer formalized much of this work in the 1980s and 1990s, in what he called a theory of endogenous growth. The idea was that technological change -- innovation -- should be modeled as part of an economy, not outside it as Solow had done. The policy implication was that economic variables, such as interest and tax rates, as well as subsidies for research and technical education, could influence the rate of innovation. (See "Post-Scarcity Prophet," December 2001.)

Romer refined the ideas of Arrow and others, developing new terms, integrating the economics of innovation and extending the Dixit-Stiglitz growth model into what he called "new growth theory." In a parallel track, Robert Lucas, a Nobel laureate at the University of Chicago, elucidated the importance of human capital to economic growth. And just prior to all this growth theory work, Paul Krugman, Elhanan Helpman, and others integrated increasing returns theory with international trade economics, creating "new trade theory." Similar theories became the bedrock of industrial organization economics.

Central to Romer’s theory is the idea of nonrivalry, a property he considers inherent to invention, designs, and other forms of intellectual creation. "A purely nonrival good," he wrote, "has the property that its use by one firm or person in no way limits its use by another." A formula, for example, can be used simultaneously and equally by 100 people, whereas a wrench cannot.

Nonrivalrous goods are inherently subject to increasing returns to scale, says Romer. "Developing new and better instructions is equivalent to incurring a fixed cost," he wrote. "Once the cost of creating a new set of instructions has been incurred, the instructions can be used over and over again at no additional cost." But if this is true, then "it follows directly that an equilibrium with price taking cannot be supported." In other words, economic growth -- and the technological innovation it requires -- aren’t possible under perfect competition; they require some degree of monopoly power.


Acho que isso é suficiente, não? :-)