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jimrandomh comments on The Tragedy of the Anticommons - Less Wrong
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The concept of eminent domain exists specifically to deal with this problem, and it is at least a few hundred years old. Eminent domain is used to force land owners to give up or allow the usage of land when necessary to allow for the construction of projects like roads and sewers, and it has also been applied in limited cases to patents. However, expanding the use of eminent domain is likely to be politically untenable, because for every time it's used there must be an unwilling counterparty who will make noise.
Eminent domain is a dirty, dirty hack. "We can't figure out how to make property work, sod it, lets turn off property and just take it at gunpoint".
There is a much cleaner solution that works without breaking property: buying options. You want to build a road, but you don't want to he held hostage. So you play a game rather like connect-4 by buying (for trivial sums) contractual obligations to sell to you at a fixed price within some sensible time limit. Once you have any workable unbroken line of optioned land between A and B, you exercise the options and buy it. All a hold-out does is cut himself out of the deal, since you can route around him.
That.... seems like it's actually a really good idea. (It doesn't fix the issues the original posting describes, about the bajillion patents/way to finely divided pastures, but as a replacement, in our current world, for eminent domain, that sounds brilliant. At least to me it does.)
Actually, it does, slightly extended.
Consider: you want to herd cattle. You buy a herding lease from "unified pastures, inc". They have gone and bought many, many options to graze cattle, and plotted out a cattle range from a connected group (with perhaps areas to fence off as hold-outs). Once they have a big enough range, and customers, they'll exercise the options and again, the hold-outs are just cut out of the deal.
Okay. But what about those patent mess things?
Repeal the concept of patents. They aren't property, they're anti-property, a variety of special authorization to extort, no different in principle from the pre-Gandhi salt monopoly in India.
It seems obvious that current patent laws are too strong/bad for business, but the concept of patents does serve the useful purpose of encouraging innovation, even as they prevent innovators from actually going through with it.
There has to be a spot where the laws reach an optimum between encouragement and prevention, and it would be very surprising if it's at zero.
There is a suggestion in this article about how prices for patents could be set by the market without the anti-competitive downsides of current patent law. Like most of Landsburg's stuff, I'm not sure I agree with all of it, there are some flaws which seem likely to undermine the main case, but it's certainly not a ridiculous suggestion.
The Georgist idea seems to have a place here.
For both land and patents, let the owners float the properties in the market and price it themselves. They will be taxed based on the value that they themselves place on the patent/property.
If the usage is truly efficient, they wouldn't mind paying the tax. If it is not, then they themselves will mark down their property/patent value, thus allowing others to buy them out.
Ofcourse, the hidden assumption here is that the government is the real property owner (of all properties in its borders) at all time, which in a de-facto sense is true today, even if it may not be true de-jure. (If the government came to grab your property, would you really have any option against them?)
I wouldn't say you need to repeal patents entirely. Just limit them better, and enforce those limitations. Same with copyrights.
So how do you create an incentive for a company to do private research and development?
This sounds like a great idea for many cases, but don't you think that the transactions costs will sometimes be a barrier?
Even in a world where people would be universally willing to do this, it may fail in the case where a unified plot of land is required for a building or project of whatever kind (as in the recent Kelo vs. New London eminent domain case).
Also, "routing around" a particular house may be difficult; it's made impossible if a group of people in the way band together and collectively hold out to take the builder's surplus.
As is all too common, though, with eminent domain, often the government is (surprise!) not very good at playing real estate developer, and the land that is seized is not put to very good use. A great example of this is with the property that was taken in the Kelo case, which to this day remains undeveloped.
Ironically, the government wasn't actually the real estate developer in this case. In fact, this was the point of the Kelo case; government has long had the power to take land for public use, and the case was about whether the government could act as something of a coercive coordinator for collecting land for private development.
Of course, had the case not taken several years to resolve, who knows what might have happened.
There are plenty of these anti-commons cases in real life, however; in my Law and Economics class we discussed a similar one in Russia, where nobody occupied the stores in a particular street because the requisite property rights were too difficult to collect, so everybody was forced into stalls right in front of the stores.
It wouldn't fail where you need a unified plot. It would just require you to spray out a wide cloud of options until some fully-connected subset of them could contain the required shape.
It might fail in the case where a very large number of people collaborate, or a very scarce resource is a show-stopper. But in that case, is it truly unfair? Or are they just setting a market rate?
Well, as long as you buy enough options, you have a reasonable chance of finding such a unified plot in what's available to you, right?
One problem with eminent domain is that it doesn't insure optimum use because the only feedback mechanism is through democratic processes, so it's just a public choice problem then. With eminent domain you will probably destroy underuse and just replace it with overuse.