[seriously serious sirius XM radio] IP reform thread

[Ramo]

For the pricing mechanism, you could have some kind of royalties scheme. Since the government will not know up front how valuable some intellectual property is until the market runs with it for a while. For art, for example, you could have some kind of relatively trivial function of the frequency of its use.

[Japher]

How about a grant program that would give the government a first right of refusal on the patent?

[KrazyHorse]

If a monopoly holder charges too much than the consumer who does not meet the utility level to buy that item may likely buy a substitute item. Had the monopoly holder priced appropriately than they would have sold to that consumer. Think of when satellite companies started competing with cable, it may have taken some of cable's customers but it also caused cable to reduce costs which grabbed some non-cable users. Had satellite priced appropriately or better it may have captured even more users.

Yes, monopoly owners have to be careful about the existence of imperfect substitutes. That's already part of their calculation, hopefully. But as long as there is a utility gap between the monopolist product and the substitute there is reason to believe that there can be a deadweight loss.

[KrazyHorse]

For the pricing mechanism, you could have some kind of royalties scheme. Since the government will not know up front how valuable some intellectual property is until the market runs with it for a while. For art, for example, you could have some kind of relatively trivial function of the frequency of its use.

Unfortunately this does not provide any knowledge to government about how valuable each viewer finds the art. Since the gov't is assumed to be pricing viewing at the marginal cost of production (0) it's impossible to discriminate between views that are merely marginally valuable and intensely valuable views.

[Japher]

If you look at product over it's total life cycle that utility, that is initially lost, would eventually be obtained. Maybe it's not a good idea to look at monopolistic products on a short term basis, but on a longer ROI basis. Hence the reason for life cycle extending products such as those created by drug delivery companies.

[KrazyHorse]

How about a grant program that would give the government a first right of refusal on the patent?

At what price?

The article I linked to suggests a 2nd price auction where MOST of the time the gov't purchases at some multiple (M > 1) of the top price (with the patent holder granted the right to refuse the offer) and some other percentage of the time the auction winner pays the 2nd price and receives the patent (with the gov't paying the difference between (M times the top price) and the 2nd price, and the originator still having the right of refusal). Which patents the gov't buys and which it doesn't are decided randomly with fixed probability after the auction is held. the fact that the gov't doesn't buy all the patents is to keep the bidders honest.

[Blaupanzer]

The concept that the "perfect" monopolist would sell to each customer at a "different price based on the marginal utility (to that individual) of his product all the way down to people for whom the marginal utility is the marginal cost of production" [is as idealistic as Marxism's "from each according to their ability, to each according to their need."] "This omniscient & omnipotent monopolist" comes from what economic theory?

Anyway, the solution to the posed problem lies in the medium that created it -- politics. The economic strata might well benefit from IP rights, but the solution in the west is political. So what part of the selected political solution would you suggest changing and what would corporations and authors gain from that to make it worth abandoning the current system?

[KrazyHorse]

If you look at product over it's total life cycle that utility, that is initially lost, would eventually be obtained. Maybe it's not a good idea to look at monopolistic products on a short term basis, but on a longer ROI basis. Hence the reason for life cycle extending products such as those created by drug delivery companies.

Please explain what you mean by this. The monopolist gets to set the price for a fixed period of time. He might also get to appropriate some utility after the patent expires (due to market position, brand recognition etc). None of this changes the fact that for a fixed period of time potential users of the idea are shut out. Having to wait diminishes the utility they gain from the idea.

[KrazyHorse]

The concept that the "perfect" monopolist would sell to each customer at a "different price based on the marginal utility (to that individual) of his product all the way down to people for whom the marginal utility is the marginal cost of production" [is as idealistic as Marxism's "from each according to their ability, to each according to their need."] "This omniscient & omnipotent monopolist" comes from what economic theory?

What the hell are you talking about? I thought I made it clear that such a thing doesn't exist in reality. The concept was inserted in order to demonstrate one possible direction to mitigate deadweight losses. Not as something perfectly achievable.

[KrazyHorse]

Anyway, the solution to the posed problem lies in the medium that created it -- politics. The economic strata might well benefit from IP rights, but the solution in the west is political. So what part of the selected political solution would you suggest changing and what would corporations and authors gain from that to make it worth abandoning the current system?

With patent buyouts as proposed above all patent holders would be at least as well off as they are now (at least naively) because they would be granted the right to refuse the buyout offer.

[KrazyHorse]

The point here is NOT to expropriate people. This is an efficiency question. We should be able to distribute the gains so that everybody's satisfied (or at least the two major groups; inventors and consumers are satisfied as blocs)

[Blaupanzer]

The current system is designed to satisfy investors and owners. These people buy the marketing rights to art and inventions. They will not benefit by eliminating the deadweight loss. They benefit by holding the price high over time. How do we, politically and economically, satisfy them using our proposed Government buyout system?

[Japher]

You want first degree price discrimination on monopolistic products?

That's a tough one.

[KrazyHorse]

The current system is designed to satisfy investors and owners. These people buy the marketing rights to art and inventions. They will not benefit by eliminating the deadweight loss. They benefit by holding the price high over time. How do we, politically and economically, satisfy them using our proposed Government buyout system?

I thought I asked people to keep the displays of aggressive ignorance to a minimum.



Holy ****, dude. The "excess" profit that the IP monopolist gains (excess meaning relative to a producer in a market with no IP protection for that idea) is PRECISELY what people would bid on in a buyout auction. The government eliminates the deadweight loss and pays off the stakeholder via a price revealed at the auction.

Monopolists don't like deadweight losses. They accept them because they don't have the power to perfectly price discriminate.

[KrazyHorse]

You want first degree price discrimination on monopolistic products?

That's a tough one.

As I said, it's far from ideal or easy to do. But a lot of producers manage to do it somewhat. Ad-supported shareware, cross-country differential pricing, timing for theatrical/DVD releases...