Subject: Re: Software as a public service
From: "Stephen J. Turnbull" <>
Date: Sat, 14 May 2005 21:50:34 +0900

>>>>> "Laurent" == Laurent GUERBY <> writes:

    Laurent> On Fri, 2005-05-13 at 16:10 +0900, Stephen J. Turnbull
    Laurent> wrote:

    >> In any case, "software" is a scarce resource, ie, more of it
    >> would be somehow useful to someone somewhere.

    Laurent> Interesting definition,

*shrug*  Any economist will give you the same one.

    Laurent> what is "not scarce" then?

Nothing of interest.  Ie, economics lays claim to explaining the whole
world.  So take it with a grain of salt, OK?

However, in the case of software (collective noun, not particular
noun), the amount of effort devoted to producing more of it justifies
shouting from the rooftops that software is SCARCE!!

    >> Otherwise you would not have a job, right?  The correct
    >> statement is that "any given program, once written, is no
    >> longer scarce, under the assumptions of perfect information
    >> about its nature and availability, and zero communication and
    >> storage costs."

    Laurent> "Perfect" and "zero" don't exist in the real world, so
    Laurent> indeed your definition followed strictly is the empty
    Laurent> set. However I think most economists would say that cost
    Laurent> of distributing and storing most digitalized works are
    Laurent> amongst the lowest of any measurable cost, so a good
    Laurent> practical "zero".

There is strong theoretical reason to believe that the world is
discontinuous at this particular zero.  Google for "Michele Boldrin
David Levine Perfectly Competitive Innovation" and also see Danny
Quah's works, starting with[1]

My intuition about the nature of the discontinuity differs from
theirs, but you should be pleased with their main conclusion: it is
precisely that discontinuity which generates returns to innovation
_without IP_ in their model.  (Of course, they also conclude the the
innovator collects full monopoly rent in some plausible cases, and the
model assumes that the follower must reverse engineer the innovation
---it's not open source.)

[1]  Anybody on FSB should be able to follow much of the argument of
Boldrin-Levine, but unfortunately I don't have a current URL.  There's
a bit of real math in B-L, but you can ignore it.  Quah is hard core.

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