0465029167-Heller:Layout 5/6/08 3:39 PM Page i The Gridlock Ec onomy 0465029167-Heller:Layout 5/6/08 3:39 PM Page ii This page intentionally left blank 0465029167-Heller:Layout 5/6/08 3:39 PM Page iii The Gridlock Economy How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives Michael Heller A MEMBER OF THE PERSEUS BOOKS GROUP NEW YORK 0465029167-Heller:Layout 5/6/08 3:39 PM Page iv Copyright © 2008 by Michael Heller Published by Basic Books A Member of the Perseus Books Group All rights reserved Printed in the United States of America No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews For information, address Basic Books, 387 Park Avenue South, New York, NY 10016–8810 Books published by Basic Books are available at special discounts for bulk purchases in the United States by corporations, institutions, and other organizations For more information, please contact the Special Markets Department at the Perseus Books Group, 2300 Chestnut Street, Suite 200, Philadelphia, PA 19103, or call (800) 810-4145, ext 5000, or e-mail special.markets@perseusbooks.com Designed by Timm Bryson Library of Congress Cataloging-in-Publication Data Heller, Michael, 1962– The gridlock economy : how too much ownership wrecks markets, stops innovation, and costs lives / Michael Heller p cm Includes bibliographical references and index ISBN 978-0-465-02916-7 (alk paper) Right of property Transaction costs I Title HB701.H45 2008 330.1’7—dc22 2008011912 10 0465029167-Heller:Layout 5/6/08 3:39 PM Page v For Debora and Ellie 0465029167-Heller:Layout 5/6/08 3:39 PM Page vi This page intentionally left blank 0465029167-Heller:Layout 5/6/08 3:39 PM Page vii Contents List of Figures Preface ix xiii The Tragedy of the Anticommons Welcome to the Lexicon 23 Where Are the Cures? 49 You Can’t Hear Me Now 79 Block Parties, Share Choppers, and BANANA Republics 107 Empty Moscow Storefronts 143 The World Is Mine Oyster 165 A Solutions Tool Kit 187 Acknowledgments 199 Notes 203 Index 247 vii 0465029167-Heller:Layout 5/6/08 3:39 PM Page viii This page intentionally left blank 0465029167-Heller:Layout 5/13/08 12:34 PM Page ix List of Figur es 1.1 Ruined castles on ninety miles of the Rhine— Bonn to Bingen 1.2 My Quaker Oats Klondike Big Inch deed 1.3 A public domain image of Dr King 10 1.4 The standard solution to commons tragedy 18 1.5 Revealing the hidden half of the ownership spectrum 18 2.1 Imagining the dawn of air travel 28 2.2 An illustration from the Wright brothers’ U.S Patent No 821,393 31 2.3 Ordinary use as the end point 33 2.4 The trilogy of ownership 33 2.5 The familiar split in ownership 34 2.6 The new spectrum of use 35 2.7 Goldilocks’ quest for the optimum 35 2.8 An ownership puzzle 37 2.9 The full spectrum of ownership 37 ix 0465029167-Heller:Layout 5/6/08 Notes to pages 178–180 3:40 PM Page 245 245 37 Pliny the Elder, The Natural History of Pliny, edited by John Bostock and H T Riley (London: H G Bohn, 1855), bk 9, chap 79, sec 54, “The First Person That Formed Artificial Oyster-Beds.” 38 Merry Wives of Windsor, 2.2.2–3 39 See Arthur Koestler, The Sleepwalkers: A History of Man’s Changing Vision of the Universe (London: Penguin, 1959), 19–25 40 Quoted in J P Hore and Edward Jex, The Deterioration of Oyster and Trawl Fisheries of England: Its Causes and Remedy (London: E Stock, 1880), 41 Anthony Hamilton, The Memoirs of Count Grammont, Complete, edited by Sir Walter Scott (1713; reprint, London: Bickers and Son, 1906) 42 The complete, searchable, and entertaining text of the Memoirs of Count Grammont is available online at www.gutenberg.org/files/5416/5416.txt 43 Charles Dickens, The Pickwick Papers (1837; reprint, London: Collins, 1982), 300 44 Davidson, Report upon the Oyster Resources, 45 Writing in 1599, Henry Buttes noted, “It is unseasonable and unwholesome in all months that have not an R in their name to eat an oyster” (Dyet’s Dry Dinner [London: Tho Creede, 1599]) See also Hedeen, Oyster, (noting that this health “superstition has no basis in fact”) Bonnie McCay has uncovered a 1719 act by the colonial assembly of New Jersey prohibiting oyster gathering from May 10 until September 1—one of the earliest oyster laws anywhere in America (Oyster Wars and the Public Trust, 8) 46 T C Eyton details an early-nineteenth-century treaty between Britain and France limiting methods and times for oyster harvesting (A History of the Oyster and the Oyster Fisheries [London: J Van Voorst, 1858], 10–11) 47 On the Faversham charter, see Patricia Hyde and Duncan W Harrington, Faversham Oyster Fishery: Through Eleven Centuries (Kent, England: Arden Enterprises, 2002) 48 Thomas C Hayes, “Confrontation in the Gulf: The Oilfield Lying below the Iraq-Kuwait Dispute,” New York Times, September 3, 1990, 49 See Gary D Libecap, “Unitization,” in The New Palgrave Dictionary of Economics and the Law, edited by Peter Newman (London: Macmillan, 1998), 3: 641–44 50 See Charles Lockwood, “In the Los Angeles Oil Boom, Derricks Sprouted Like Trees,” Smithsonian, October 1980, 187–206; Kenny A Franks and Paul F Lambert, Early California Oil: A Photographic History, 1865–1940 (College Station: Texas A&M University Press, 1985), 103–8 51 See Gary D Libecap and James L Smith, “The Self-Enforcing Provisions of Oil and Gas Unit Operating Agreements: Theory and Evidence,” Journal of Law, Economics, and Organization 15 (1999): 526–48, at 526 0465029167-Heller:Layout 246 5/6/08 3:40 PM Page 246 Notes to pages 182–198 52 Aerograph Co., Signal Hill, circa 1923 Courtesy of the Prints and Photographs Division, Library of Congress, Control #2007660408 For more on Signal Hill, see www.consrv.ca.gov/dog/photo_gallery/historic_mom/photo_01.htm and www.priweb.org/ed/pgws/history/signal_hill/signal_hill_1932.html 53 For a historical perspective on exclusive economic zones, see “The United Nations Convention on the Law of the Sea: A Historical Perspective,” www.un.org/ Depts/los/convention_agreements/convention_historical_perspective.htm# Exclusive%20Economic%20Zone 54 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, edited by Edwin Cannan, 5th ed (1776; reprint, London: Methuen, 1904), bk 1, chap 3, para 55 Quoted in Wennersten, Oyster Wars, 28 56 Frank Leslie’s Illustrated Newspaper, May 18, 1867, 136 Courtesy of the Prints and Photographs Division, Library of Congress, LC-USZ62-128743 The engraving above the entrance to the lunchroom reads “Oysters in Every Style.” Chapter Michael A Heller, “The Cutting Edge of Poster Law,” Journal of Legal Education 49 (1999): 467–79 J P Hore and Edward Jex, The Deterioration of Oyster and Trawl Fisheries of England: Its Cause and Remedy (London: Elliot Stock, 1880), 1–2 Japan has a best-selling new genre of novels composed on cell phone keypads (Norimitsu Onishi, “Thumbs Race as Japan’s Best Sellers Go Cellular,” New York Times, January 20, 2008, Foreign Desk, 1) See “Narita Fiasco: Never Again” (see chap 1, n 19) For example, see Depoorter and Vanneste, “Putting Humpty Dumpty Back Together” (see chap 1, n 62) On the use of the Bankruptcy Code, U.S.C Section 363(f ), as a solution to anticommons tragedy, see Edward Janger, “Private Property, Information Costs, and the Anticommons,” Hastings Law Journal 54 (2003): 899–930, at 924–28 Tomas Kellner, “Chop Job,” Forbes, November 1, 2004, 83–84 Ibid., 84 Ibid 10 Ibid., 86 0465029167-Heller:Layout 5/13/08 12:34 PM Page 247 Index AARP, 116 Academic research, 66–68 Advanced Wireless Service (AWS) spectrum, 91, 92 Aeronautics industry, 30–31 Affymetrix, 51, 68 African American farm ownership, 20, 121–125 Agricultural research, 57–58 Air Commerce Act (1926), 29 Air plane manufacturing, 27, 30–32 Air Traffic Controllers Association, Air travel air collision and, 19 airports and runways and, 8–9 Congress and, 29 federal government and, 27 Google Book Search vs,, 29–30 lighthouse beam and, 27–29, 31 litigation and, 64 patent pools and, 72–74 peer production and, 74 regulation and, 75–76 Supreme Court, U S and, 29 Wright brothers and, 30, 31, 64, 73 Alaska shallow natural gas, 132–134 Alzheimer’s disease, cures for, 4, American Indian Probate Reform Act of 2004, 129 American Society of Composer, Authors and Publishers (ASCAP), 72, 191, 196 American University, 12 Analog television, 94–97 Anticommons spectrum, 94–99 analog television and, 94–97 UNE unbundling, 103–104 wireless cable and educational, 97–99 Antitrust law, 73, 184–185 Apple, 64–65 Aristotle, 16 Arizona, 112 ASCAP See American Society of Composer, Authors and Publishers AT&T, 90, 92, 93, 100, 184 Aufderheide, Pat, 12 Australia open access solutions in, 39–40 tradable fishing quotas in, 118 Authors Guild, 30 AWS See Advanced Wireless Service spectrum B&J Fabrics, 111 Babbitt, Bruce, 129 247 0465029167-Heller:Layout 5/13/08 12:34 PM 248 BANANA republics, 131–141 Alaska shallow natural gas and, 132–134 costs of, 138–139 definition of, 131 horizontal, 134–135 NIMBYism and, 131–132 NIMTOO and, 140 regulatory expediters and, 134–136 solutions for, 139–140 vertical, 135–136 worldwide, 136–138 Bayer, 56 Bayh-Dole Act (1980), 58 Beastie Boys, 14 Bekker, Semyon, 156 Berliner, Dana, 117 BIDs See Business Improvement Districts Big inch gridlock, 6–8, 27–29, 205n15 Big Pharma, 4, 71 BIO, 215n2 Biological Innovation for Open Society, 75 Biomedical gridlock See Drug development; gene patent gridlock Biotech revolution, 5, BlackBerry, 100 Blackstone, William, 33–34 Block parties BIDs and, 119 blight and, 119 Columbia University confiscation and, 114 condos, rise of and, 118–119 eminent domain and, 113–117 land assembly district (LAD) solution for, 118–121 land assembly for economic development and, 111–115, 118–121 New York Times land confiscation and, 108, 109–111 Page 248 Index Susette Kelo home and, 115–117, 119 BMI See Broadcast Music Incorporated Boyer, Peter, 55 The Brady Bunch, 12, 206n34 Bristol-Myers Squibb, 1, Broadcast Music Incorporated (BMI), 72, 191, 196 Broadcom, 101–103 Brooks, William, 169, 173, 174 Brown, John, 122–125 Buchanan, James, 21, 41–42, 136–137 Bulgakov, Mikhail, 143 Bureau of Indian Affairs, 126, 128, 129 Business Improvement Districts (BIDs), 119, 194 California, 112 Canada, 194 Capitalism laissez-faire, 30 modern, 17 socialism and, 18 Car manufacturing, 31 Carson, Clayborne, Cato Institute, 116 Caulfield, Barbara A., 68 Celera Genomics, 1, 2, 70 Cellular licenses See Telecom gridlock Center for Social Media (American University), 12 Charles I, King, 168, 170 Charles II, King, 178 Chesapeake Bay Oyster Wars, 24, 168–173, 174 Chicago O’Hare Airport, 8, 205n20 China, 48, 54, 183–184 China Beach, 12 Christian Science Monitor, Chuck D, 13, 14, 16, 207n41 Civil War, U S., 122 Clark, Jerald, 134 Clean Water Act, 135 Clearwire, 99 Coase, Ronald, 87 0465029167-Heller:Layout 5/13/08 12:34 PM Page 249 Index Cobell v Kempthorne, 128–129 Cockburn, Iain, 59, 74 Cohen, Scot, 111 Cold War, 34, 59 Columbia University land condemnation, 114 Comedy of Anticommons, 46–48 Commons property group access and, 34, 37, 41 group property and, 37–39 lessons from, 40–41 open access and, 34, 37, 39–40 property trilogy and, 33–34 Communism, 146 Compound X, 4–6, 69, 124, 147 Congress air travel and, 29 copyright and, 30 gene patent gridlock and, 58 Native American allotment land and, 127 patent law and, 67 Congress of Vienna (1815), 21 Conquest, 180–182 Conservation, 40 Australian fishermen and, 118 oysters and, 167–168, 170, 175–176 Conservation easements, 47 Conservation Fund, 197, 198 Constitution, U S., 47 eminent domain and, 117 takings clause of, 147 Convention on the Law of the Sea (UN), 182 Copyright, 1–15 clearing rights and, 9–13 Congress and, 30 documentary films and, 9–13 fair use and, 15, 30 music and, 11 Copyright Term Extension Act of 1998, 207n46 Corsica, 171 Costa Rica, University of, 57 249 Cournot, Antoine Augustin, 42–43, 188 Court of Appeals, U S., 29 Creative Commons, 74, 197, 224n96 Crichton, Michael, 49 Curb Your Enthusiasm, 12 Curtiss, Glen, 30, 73 Curtiss Company, 30, 31, 64, 100 The Cutting Edge of Poster Law (Heller), 188 David, Larry, 12 Davidson, Hunter, 170, 171 Davidson, John, 47 De Soto, Hernando, 155–156 Dean, Katie, 13 Detkin, Peter, 218n34 Diamond, Jared, 17 Dickens, Charles, 179 DirecTV, 92 DJ Drama, 14 Documentary films, 9–13 Eyes on the Prize, 9–11, 16 Mad Hot Ballroom, 12 Tarnation, 12 DOJ See Justice Department, U S Drug development commercial, 68–69 Compound X and, 4–6 federal government and, golden age of, 219n37 gridlock and, 4–6 monopoly and, 45 privatization and, tragedy of anticommons and, See also Gene Patent gridlock Drug resistance, 16 DVDs, 12–13 E B Groome, 172 EchoStar, 92 Economics of compliments, 42–43 tragedy of anticommons and, 42–43 0465029167-Heller:Layout 5/6/08 3:40 PM 250 Einstein, Albert, 79 EIR See Environmental impact review Eisenberg, Rebecca, 50, 60, 76, 77 Eisenhower, Dwight, 117 Eliza Howard, 172 Ellickson, Robert, 38 Eminent domain, 108 abuses of, 115–117 blight and, 111, 119 Constitution, U S and, 117 just compensation and, 108 majority tyranny and, 113–114 New York Times land condemnation and, 108, 110–111 Supreme Court, U S and, 116–117, 119 Susette Kelo home and, 115–117 voluntary assembly vs., 113–115 Empson, William, 27 England, 48 housing privatization in, 145 Environment, 24 global warming and, 16, 183 pollution and, 25, 184 Environmental impact review (EIR), 135–136 ESTs See Expressed sequence tags EU See European Union European Union (EU), 185 Exclusive economic zone, 182 Expressed sequence tags (ESTs), 61 Eyes on the Prize (film), 9–11, 16, 72 Fair use, 15, 30, 207n46 Farm ownership, 20, 121–125 FCC See Federal Communications Commission FDA See Food and Drug Administration, U S Federal Communications Commission (FCC) analog television and, 96 Page 250 Index cellular licenses and, monopoly and, 104 spectrum commons and, 82, 84–86, 88, 89, 91, 93 wireless cable and educational spectrum and, 98 Federal Court of Claims, 30 Federal government air travel and, 27 drug development and, overfishing and, 25 The Federalist, 47 Federal Trade Commission (FTC), 65, 73–74, 75 Films See Documentary films Food and Drug Administration, U S (FDA), 54, 59, 74–75 Forbes, 4, 197 Ford, Henry, 31 Ford Foundation, 10–11 France, 48 Free Culture (Lessig), 29 FTC See Federal Trade Commission Gaider, Igor, 145 Game theory, 213n44 Gates Foundation, 69, 197 GATT See General Agreement on Tariffs and Trade Gelsinger, Patrick, 81 Gene Patent gridlock, 49–78 academic research and, 66–68 agricultural research and, 57–58 Bayh-Dole Act and, 58 commercial drug development and, 68–69 drug discovery gap and, 59–60 ESTs and, 60–62 evaluation of, 63–65 Golden rice success story and, 54–56 litigation and, 51–52, 53, 59, 62 MAD strategy and, 59 0465029167-Heller:Layout 5/6/08 3:40 PM Index patent trolls and, 59, 65 patenting increases and, 53 SARS and, 54 schizophrenia and, 53 solutions for, 69–76 stacked licenses and, 62–63 See also Patents General Agreement on Tariffs and Trade (GATT), 183 Germany, 19, 120, 131 Gertner, Jon, 138 Giuliani, Rudy, 110 Glaeser, Edward, 138 Global warming, 16, 183 Golden rice success story, 55–57, 69 Goldilocks’ Quest, 35–37, 80, 188 Google Book Search, 29–30 Governing the Commons (Ostrom), 25 Governor McLane, 171–172 Grammont, Chevalier du, 178, 179 Gridlock African-American farm ownership, 20, 122–125 air collision, 19 air plane manufacturing, 30–32 air travel and, 27–29 airports and runways and, 8–9 Alaska shallow natural gas, 132–134 analog television, 94–97 big inch, 6–8 Bristol-Myers Squibb, 1, Broadcom v Qualcomm, 101–103 causes of, 60 Celera Genomics, 1, cellular licenses, 4, 79–106 communal apartments, 183 conservation easements, 47 costs of, 122 course readings and, 15 definition of, 1–2 documentary films and, 9–13 drug development and, 4–6, 49–78 Page 251 251 ESTs, 61 exclusive economic zones, 183 Eyes on the Prize, 9–11, 16 federal political institutions, 48 global trade institutions, 184 global warming, 184 Golden rice success story and, 55–57 Google Book Search, 29–30 hidden costs of, 2, 23 IBM, intentional creation of, 47 Irish potato famine, 129–130 mixtapes and, 14–15 nanotechnology, 106 Native American land, 124–128 oil unitization, 44 organ donation, 19 phantom tollbooths and, 3–4, 5, 6, 11, 43, 54, 62–63 poster law, 189 Quaker Oats, 6–8 rap music and, 13–14 real estate, regulatory expediters, 134–136 Rhine robber barons, 3–4, 5, 20, 54 Russian storefronts, 148–152 SARS, 54–55 schizophrenia, 53–54 semiconductors, 105, 218n33 software, 106 solutions for, spotting and naming, 187–191 stacked licenses, 62–63 state enterprises, 183 timber conservation fund, 197–198 Times Square, New York Times, 109–111 tragedy of anticommons and, tragedy of telecommons and, UN Security Council veto, 48 UNE unbundling, 103–104 wind power, 19–20 0465029167-Heller:Layout 5/6/08 3:40 PM 252 Page 252 Index Gridlock, continued wireless cable and educational spectrum, 97–99 See also Tragedy of anticommons Gridlock solutions assembly tools, 193–194 boundary principle in law, 7–8 commons property solutions and, 40–41 cooperative, 72–75 cooperative engagement, 20 copyright collectives, 21, 190–191 exclusive economic zones, 140, 182 fair use and, 15, 30, 207n46 gridlock, spotting and naming, 187–191 hybrid solutions, 43–44 individual entrepreneurial effort, 20 land assembly districts, 118–121, 194 licensing terms, 69 market-driven, 69–70 markets for substitutes, 21, 69 monitoring, 191–192 monopoly, 45 oil unitization, 43–44 patent pools, 21, 31 philanthropy, 197–198 political advocacy, 20, 24, 25 privatization, 24–25 property-preventing investments, 70–72 protrust, 185, 195 quick isolation and, 192–193 regulation and, 75–76, 131, 139–140 vaccination, 192 voluntary agreement, 196–197 WTO, 184 Hardin, Garrett, 17, 24 Harpers Weekly, 174 Harvard Law Review, 119 Hatfield, Dale, 80 Hazlett, Thomas, 81, 90, 94 HBO, 12 Henderson, Florence, 206n34 Honduras, 112 Human Genome Project, 62, 220n45 Hundt, Reed, 93 Hussein, Saddam, 181 Hampton, Henry, 10, 16 Harbor gangs, 38–39, 125 Japan, 79, 81, 100, 120, 137–138, 190 Japan Tobacco, 56 IBM, 1, 2, 64–65, 70 India, 56 Indian Land Tenure Foundation, 126 Institute for Genomic Research, 220n45 Institute for Justice, 116 Intel, 64–65 Intellectual property academic research and, 66–67 documentary films and, 9–13 gene patent gridlock and, 50–51 Golden rice success story and, 56 nature of, 50 telecom gridlock and, 103 Interior Department, U S., 129 International Association for the Study of Commons, 24 International Monetary Fund, 183 International Paper, 197–198 International Trade Commission (ITC), 101–102 Irish Americans, 108 Irish potato famine, 129–130 It Takes a Nation of Millions to Hold Us Back (Public Enemy), 13 Italy, 145 ITC See International Trade Commission 0465029167-Heller:Layout 5/6/08 3:40 PM Index Julius Caesar, 177 Just compensation, 108, 147 Justice Department, U S (DOJ), 65, 73, 185 Kahn, Kevin, 84 Kelo, Susette, 115–117 Kelo v City of New London, 116–117, 119 Kennedy, Anthony, 101 Kennedy, John F., 175 King, Martin Luther, Jr., 9–11, 16 Kobe earthquake (1994), 137–138 Kˆhler, Georges, 58 Korea, 120 Kosersky, Rena, 11 Kuwait, 181 Kyoto Protocols, 183 LADs See Land Assembly Districts Lambert, David, 13 Land Assembly Districts (LADs), 118–121 Land gridlock, 107–141 BANANA republics and, 109, 131–141 block parties and, 109–121 land assembly for economic development and, 9, 108, 111–115, 118–121 share choppers and, 108, 109, 121–131 “Legal Fiction” (Empson), 27 Lemley, Mark, 53 Lessig, Lawrence, 29, 30, 93–94, 224n96 Lipitor, 36, 139 Litigation air travel and, 64 gene patent gridlock and, 51–52, 53, 59, 62 innovation and, 51 patents and, 101–102 Page 253 253 Lobster gangs, 38–39, 125 Locally undesirable land use (LULU), 239n81 Long, Shelley, 206n34 Los Angeles, Cali., 8–9 Los Angeles Times, 50 “Love and Marriage” (Sinatra), 13 LULU See Locally undesirable land use Lynch, Richard, 100–101 MAA See Manufacturers Aircraft Association MacArthur Foundation, 197 MAD See Mutual assured destruction strategy Mad Hot Ballroom (film), 12 Madison, James, 47, 169 Manufacturers Aircraft Association (MAA), 31, 73 Married with Children (television), 13 Marx, Karl, 164 Maryland Oyster Navy, 170 Mason, George, 169 McCain, John, 95–96 Merck, 53–54, 58–59, 61, 71, 72, 220n45 Merges, Robert, 70, 71 Michigan Law School, University of, 189 Mickey Mouse, 207n46 Microsoft, 64–65, 184, 218n33 Middle Ages, 3–4 Milstein, Cesar, 58 Monopoly costs of, 45 drug development and, 45 patents and, 45 tragedy of anticommons and, 76–77 underuse and, 48 Monsanto, 56 Moody Blues, 13 Morrison, Toni, 107 0465029167-Heller:Layout 5/6/08 3:40 PM 254 Motorola, 4, 51 Music clearing rights and, 11, 13 film and DVDs and, 13 hip-hop, 13 mixtapes and, 14–15 rap, 13–14 tragedy of anticommons and, 13 Mutual assured destruction (MAD) strategy, 59, 70 Myriad Genetics, 76–77 NAACP See National Association for the Advancement of Colored People Naclerio, Nicholas J., 51 Nanotechnology, 106 NAS See National Academy of Sciences National Academy of Sciences (NAS), 65, 66, 75 National Association for the Advancement of Colored People (NAACP), 116 National Institutes of Health (NIH), 61, 67, 75, 76 National Research Council (NRC), 65, 66, 68 Native American allotment land, 125–129 checkerboarding and, 126–129 fractionation and, 127–129 Supreme Court, U S and, 126, 128 “Nervous People” (Zoshchenko), 159 New Mexico, 112 new molecular entities (NMEs), 59, 60 New York City Fire Department, 83 New York City, N Y., 8, New York Times, 12, 14, 38, 49, 57, 129, 131, 134, 136 New York Times land confiscation, 108 New York Times Magazine, 138 New Yorker, 11 Page 254 Index Nextel, 90, 92, 98, 99 “Nights in White Satin” (Moody Blues), 13 NIH See National Institutes of Health NIMBYism, 131–132, 239n81 NIMTOO, 140, 239n81 NMEs See new molecular entities NMR See nuclear magnetic resonance testing Nokia, 103 Noonan, Patrick, 197, 198 Novartis, 56 nuclear magnetic resonance (NMR) testing, 194 OED See Oxford English Dictionary Oil unitization, 43–44 Optimal use Goldilocks’ Quest and, 35–37 private property and, 36 Orbach, Sidney, 110–111 Organ donation, 19 Ostrom, Elinor, 24, 25 Overfishing, 17, 25, 48 Overuse definition of, 32–33 optimal use and, 35–37 oysters and, 170 private property and, solutions for, 25 Telecom and, 80–81 tragedy of commons and, Oxford English Dictionary (OED), 32, 35 The Oyster (Brooks), 169 Oysters, 24 ancient Rome and, 176–177 Chesapeake Bay Oyster Wars, 168–173 closing access and, 173–175 conquest and, 180–182 conservation and, 167–168, 170, 175–176 0465029167-Heller:Layout 5/6/08 3:40 PM Index exclusive economic zones, 182 open-access, 167–168 overuse and, 170 Shakespeare, William and, 177–178 Supreme Court, U S and, 244n29 survival of, 165–166 tragedy of commons and, 165–166 Pataki, George, 110 Patent and Trademark Office, U S (PTO), 60–62, 192 Patent Reform Act of 2007, 215n1 Patents, 62 air travel and, 64, 72–74, 77, 100 Congress and, 67 litigation and, 101–102 monopoly and, 45 nature of, 50 patent pools, 31, 72–74, 194 patent pools and, 118 patent thickets, 43, 103, 204n13 patent trolls and, 59, 65, 100, 218n34, 219n35 process for, 52 reform of policy for, 75–76 scope of, 53 Supreme Court, U S and, 65–66 validity of, 53 weak, 53 See also Gene Patent gridlock A Patent System for the 21st Century (NAS), 65 Paul’s Boutique (Beastie Boys), 14 PCS See Personal communication services Peer production, 74 Personal communication services (PCS), 90 Pezman, Steve, 39 Phantom tollbooths, 43, 54 block parties and, 114 documentary films and, 11 drug development and, Page 255 255 gene patent gridlock and, 62–63 robber barons and, 3–4 tragedy of anticommons and, Philanthropy, 69, 197–198 Philippines, 56 The Pickwick Papers (Dickens), 179 Pliny the Elder, 177, 186 Poland, 146 Pollution, 25, 184 Postal Service, U S., 45 Potomac Fisheries Bill, 175 Potrykus, Ingo, 55–56 PPIs See Property-preventing investments Pranley, Chris, 218n33 Private property adaptation to new resource conflicts and, 29 conservation effect and, 25 definition of, 33–34 gridlock and, 24 moral justification for, 25 optimal use and, 36 overuse and, Parking lot example and, 23–25 as part of trilogy, 33 property spectrum and, 18–19 property trilogy and, 33–34 Shepherd’s field example and, 26 state property vs., 34 tragedy of anticommons and, tragedy of commons and, 17–19, 24 See also Privatization Private property spectrum auctions and, 91–92 definition of, 89, 91 flexible use and, 92 history of, 87, 89–91 Privatization See also Private property drug development and, Russian real estate, 144 tragedy of anticommons and, tragedy of commons and, 17–19 0465029167-Heller:Layout 5/6/08 3:40 PM 256 Property rights clarity of ownership and, 147 content of, 18–19, 147 Property spectrum, 41fig private, 18–19, 89–92 tragedy of commons and, 24 Property trilogy, 33–35 Property-preventing investments (PPIs), 70–72 PTO See Patent and Trademark Office, U S Public Enemy, 13–14, 16 Public Intellectual Property Resource for Agriculture, 75 Puerto Rico, 118, 194 Puff Daddy, 14 Quaker Oats, 6–8, 111 Qualcomm, 101–103 Rai, Arti, 76 Ratner, Bruce, 110, 111, 114 reach-through license agreements (RTLAs), 62 Real estate gridlock SeeLand gridlock Reaping the Benefits of Genomic and Proteomic Research (NRC), 65 Recording Industry Association of America, 14 Reed, Stanley, 175 Regulation air travel and, 75–76 ”command and control”, 17 telecom gridlock and, 103–104 tragedy of anticommons and, 25 tragedy of commons and, 17 Research in Motion, 100 Researches into the Mathematical Principles of the Theory of Wealth (Cournot), 42 Rhine League, 20 Rice, Gus, 170–171 Riordan, Richard, 134–135, 140 Page 256 Index Robber barons, 3–4, 5, 20, 54, 98 Roberson, Dennis, Rome, 176–177 Roosevelt, Franklin D., 31 Rose, Carol, 46 Rosston, Gregory, 93 Roth, Steven, 131 RTLAs See reach-through license agreements Rubin, Robert, 129 Rumaila oil field, 181 Russia, 48, 100 anticommons, spacial vs legal and, 160–162 anticommons discovery in, 145–146 apartments in, 157–159 BANANA republics vs., 148 commercial real estate privatization and, 144, 145–146, 154–155 communal apartments in, 159–164 communism and, 146 corporate privatization and, 144 corruption and, 153–156 economy of, 143–144 housing privatization in, 144, 158–164 humpty dumpty gridlock and, 146–148 privatization of storefronts in, 151–156 socialism in, 144, 146, 148–149 solutions for, 162–164 Soviet ownership to storefront anticommons in, 148–151 storefronts in, 145–152 Sallust, 177 Samsung, 101 Sanderson, Lady, 178–179 SARS See Severe Acute Respiratory Syndrome 0465029167-Heller:Layout 5/6/08 3:40 PM Page 257 Index Schizophrenia, 53–54 Science, 1, 66 Science, 5, 50, 60 Selzer, Lawrence, 198 Semiconductors, 105, 218n33 Senate Commerce Committee, 96 September 11, 83, 140 Sergius Orata, 177 Severe Acute Respiratory Syndrome (SARS), 54–55 Sewell, Amy, 12 Shakespeare, William, 177–178, 186 Shapiro, Bennett, 53, 58–59 Shapiro, Carl, 43, 53 Share choppers, 121–131 African American farm ownership and, 121–125 Irish potato famine and, 129–130 Native American allotment land and, 125–129 tragedy of anticommons and, 130 Sinatra, Frank, 13 single nucleotide polymorphisms (SNPs), 71–72 Sisseton-Wahpeton Lake Traverse Reservation, 109, 128 60 Minutes, 110, 111 Smith, Adam, 182–183 SMR See Specialized mobile radio SNPs See single nucleotide polymorphisms Socialism, 18, 144, 146, 148–149 Software, 106 Sondock, Clifford, 136 Song of Solomon (Morrison), 107 South Korea, 81, 100 Specialized mobile radio (SMR), 90 Spectrum anticommons, 94–99 commons, 80–89 flexible use and, 92 idle, 82–89, 100 management of, 83–84 257 military and, 84 new allocations of, 91–93 private-property, 87, 89–94 state, 83–84 underuse and, 226n7 unlicensed, 85–86, 88 under use and overuse and, 80–82 Spectrum anticommons, 82–83, 94–99, 103–104 Spectrum commons, 79 arguments for, 87–89 commons tragedy solutions and, 87 definition of, 84 example of, 84 overuse and underuse and, 80–82 promise of, 86–89 state spectrum and, 83–84 underuse and, 80–82 unlicensed bands and, 85–86 Sprint PCS, 90, 92, 93, 98, 99, 100, 102 SSOs See standard-setting organizations standard-setting organizations (SSOs), 196 Stanford University, State spectrum, 83–84 Supreme Court, U S air travel and, 29 Chesapeake Bay Oyster Wars and, 170, 174 eminent domain and, 116–117, 119 Native American allotment land and, 109, 126, 128 oysters and, 244n29 patent litigation and, 65–66, 101–102 Surfers, 39 Surfer’s Journal, 39 Surowiecki, James, 11 Syngenta, 56 Taaffe, Lord, 178–179 Taiwan, 120 0465029167-Heller:Layout 5/6/08 3:40 PM 258 Tarnation (film), 12 Taylor, John, 178 Telecom Act (1996), 92, 96–97, 104 Telecom gridlock, 79–106, 84 analog television and, 94–97 anticommons spectrum and, 82–83, 94–99 intellectual property and, 103 overuse and underuse and, 80–82 prime spectrum and, 79, 82–83 private-property spectrum and, 87, 89–94 regulation and, 103–104 solutions for, 93–94 spectrum commons and, 84–89 state spectrum and, 83–84 UNE unbundling and, 103–104 wireless cable and educational spectrum, 97–99 wireless penetration and, 79, 103 Television series The Brady Bunch, 12, 206n34 China Beach, 12 Curb Your Enthusiasm, 12 Married with Children, 13 Wiseguy, 13 WKRP in Cincinnati, 12–13, 207n36 Tennessee Mining Company, 198 Texas, 112 Thailand, 194 Thatcher, Margaret, 145 Tierney, John, 38 T-Mobile, 91, 92, 93, 100 To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (FTC), 65 Tom Swift and His Airship (Appleton), 28 Tom Swift and His Great Searchlight (Appleton), 28 Tragedy of anticommons causes of, 18 comedy of anticommons and, 46–48 Page 258 Index costs of, 48 definition of, 1–2, 18–19, 26–27 drug research and, economics of, 42–43 empirical studies of, 43, 44 as endpoint of property, 37 gridlock and, group exclusion and, 41, 42, 46–47 invisibility of, 2, 18 land gridlock and, 108–109 monopoly and, 76–77 monopoly vs., 44 music and, 13 phantom tollbooths and, private property and, privatization and, proof of, 21, 41–42 property spectrum and, 24 protrust, 184–185 regulation and, 25 Russian real estate privatization and, 144 share choppers and, 130 tragedy of commons vs., 1, 16–19, 41–42 underuse and, 2, 18, 21, 25, 35–36, 37 wealth loss and, See also Gridlock Tragedy of commons Aristotle and, 16 Australia fishermen and, 39–40 closing access and, 173–175 custom and, 184 definition of, 17 group property and, 37–41 Hardin, Garrett and, 17, 24 hybrid solutions to, 39–40 lobster gangs and, 38–39 order without law and, 38–39 overuse and, oysters and, 165–166 0465029167-Heller:Layout 5/6/08 3:40 PM Page 259 Index Parking lot example and, 23–25 private property and, 17–19 privatization and, 17–19 property spectrum and, 24 regulation and, 17 solutions for, 17–19, 24 trade and conquest and, 180–182 tragedy of anticommons and, 1, 16–19, 24, 41–42 Tragedy of telecommons, 4, 81–82, 99–100, 106 Treasury, U S., 92, 93 UN See United Nations Underuse, 18, 21, 23, 32–37 monopoly and, 48 optimal use and, 35–37 spectrum and, 226n7 spectrum commons and, 80–82 spotting, Telecom and, 80–81 tragedy of anticommons and, 2, 25, 37 UNE unbundling, 103–104 United Nations Security Council, 48 United Nations (UN), 48, 182 United States aeronautics industry in, 30–31 patenting process in, 52–53 wind power in, 19 Urbani, Carl, 54 Venezuela, 112 Verizon, 89–90 Verizon Wireless, 92, 93, 100–101, 102 259 Vonage, 100 Vornado Realty Trust, 131 Wall Street Journal, 101 Wallace, Stratford, 111 Walsh, John, 66–67, 69 Walt Disney Company, 207n46 Warmestre, Miss, 178–179 Warner Brothers, 12 Washington, George, 169, 170, 175 Washington Post, 123 The Wealth of Nations (Smith), 182 Weiser, Phil, 80 Wellcome Trust, 71–72 WHO See World Health Organization Wikipedia, 74 Wired, 13 Wireless cable and educational spectrum, 97–99 Wiseguy (television), 13 WKRP in Cincinnati, 12–13, 207n36 Woolley, Scott, World Bank, 100, 144, 146, 183 World Health Organization (WHO), 54–55 World Trade Organization (WTO), 183, 184 World War I, 31 World War II, 183, 190 Wright brothers, 30, 31, 64, 73, 100 Yeltsin, Boris, 144 Yoon, Yong, 21, 41–42, 136 Zeneca, 56 Zoshchenko, Mikhail, 159 ... PM Page iii The Gridlock Economy How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives Michael Heller A MEMBER OF THE PERSEUS BOOKS GROUP NEW YORK 0465029167 -Heller: Layout 5/6/08... economy : how too much ownership wrecks markets, stops innovation, and costs lives / Michael Heller p cm Includes bibliographical references and index ISBN 97 8-0 -4 6 5-0 291 6-7 (alk paper) Right of... Private ownership usually increases wealth, but too much ownership has the opposite effect: it wrecks markets, stops innovation, and costs lives Savvy companies such as IBM, Celera, and BristolMyers