Monday, October 1, 2007
Public vs private (2)
"A second category of publicly provided capital goods includes those that are nonrival, when the use of the capital by one citizen does not diminish its availability for use by others. A scientific discovery is a classic nonrival good. Once the structure of DNA has been discovered, the use of that wonderful knowledge by any individual in society does not limit the use of the same knowledge by others in society. Economic efficiency requires that the knowledge should be available for all, to maximize the social benefits of the knowledge. There should not be a fee for scientists, businesses, households, researchers, and others who want to utilize the scientific knowledge of the structure of DNA! But if there is no fee, who will invest in the discoveries in the first place? The best answer is the public, through publicly financed institutions like the National Institutes of Health (NIH) in the United States. Even the free-market United States invests $27 billion in publicly financed knowledge capital through the NIH."