Innovation and the Tragedy of the Anti-Commons

I have long been intrigued by property theorist Michael Heller’s anti-commons work. He sometimes calls it “ownership congestion”, and it is the idea that too much ownership in a market can block innovation, whether in drugs, music, airport runways, etc.

Check his seminal paper here, and, for those of you unfamiliar with the idea, here is the Wikipedia definition:

The tragedy of the anticommons is a hypothetical situation where rational individuals (acting separately) collectively waste a given resource by under-utilizing it. According to proponents of the theory, this would happen when so many individuals have rights of exclusion (such as property rights) of a resource that the transaction costs of coordinating those rights overwhelm any previously existing benefit. This situation (the “anticommons”) is contrasted with a commons, where many individuals have privileges of use (or the right not to be excluded) in a certain resource. The tragedy of the commons is that rational individuals, acting separately, may collectively over-utilize a scarce resource.

I’m likely late to this, but he apparently has a new book out on the subject, called The Gridlock Economy. It turns out he also has an Author@Google talk, which is worth watching (so long as you can get past the Columbia University professor’s initially dry presentation style).

More good reading on the subject of common interest tragedies here from Lee Anne Fennell.

Before anyone else points it out, I will race to the front and say Heller’s work is really a refocusing of classic transaction cost theory. No question. And further, it’s also the sort of thing that is too easily translated into politics, so you will likely see a left/right split on the issue of whether markets can contract out of under-use situations.