Subject: Re: thoughts after a lecture and a question
From: Liudvikas Bukys <bukys@cs.rochester.edu>
Date: Thu, 12 Dec 2002 09:17:29 -0500


Yes, markets are good at allocating resources in the presence of scarcity,
and at motivating appropriate behavior at the margin (rewarding effort or
creativity which may alter the level or type of scarcity).  That's more
or less the context of water allocation and investment.

The market around creating intellectual property that is deliberately
not scarce is somewhat different.  On the one hand, you're investing
in something for which you get the benefit and all competitors get
the benefit as well.  You are investing for existence and use and cost
avoidance instead of investing for scarcity and return on investment
via monopoly pricing.

However, this does limit investment to those who expect to use the
results, directly, themselves.  This is real, but it's just not as fluid
as a capital market filled with intermediaries doing purely financial
calculations while sloshing buckets of money indirectly for others,
with lots of ease in aggregation.  Direct investment, on the other hand,
has large transaction costs of its own -- the overhead forming consortia,
passing the hat, etc.


Things in FSB are more value-through-scarcity market-oriented in the
labor/service aspect -- the real scarce resource is being able to get
certain things done at all, which boils down to the supply of people
able to do things and supply of people able to create the tools that
enable the doing.  Of course this recognition of the enduring value
of service/creation and the eroding price-willing-to-be-paid for
permission-to-use is something that was recognized right away by,
e.g., RMS.

Liudvikas Bukys
bukys@cs.rochester.edu