Abstract
In her path-breaking work, Elinor Ostrom provides theoretical and empirical evidence suggesting that individuals often overcome the problem of collective action and arrange privately for the provision and allocation of public goods, including informal property rights. Ostrom has also found that local experimentation and self-governance often produce more effective results than rulemaking by the state. In his Coase Theorem, Ronald Coase arrives at a somewhat similar conclusion. Ostrom and Coase both recognize that high transaction costs can block private rule making. The new literature on institutions, however, has jettisoned the model of a benevolent welfare maximizing state: The state does not as a rule assign the license to create property rights to those who are most likely to provide efficient solutions. Still, private individuals often find various opportunities to supply their own informal rules and governance systems. In this paper, I examine recent evolution of property rights in Iceland’s national health records. My findings a) support the hypothesis that the demand for exclusive and well-defined property rights depends directly on the value of the assets in question; b) show that de facto rights, which are the effective economic property rights, can deviate from the corresponding de jure rights; c) demonstrate the relevance of the Coase-Ostrom insight concerning the role of private ordering; and d) provide evidence that competition between mental models can have a major role in the evolution of property rights.
Highlights
In her path-breaking work Elinor Ostrom provides theoretical and empirical evidence suggesting that individuals often overcome the problem of collective action and arrange privately for the provision and allocation of public goods, including informal property rights
With the help of colleagues, and aided by international venture capital Stefánsson set up a corporation registered in Delaware for the primary purpose of using Icelandic data to find the genetic causes of major diseases and their cures
In 1997 or thereabouts, Decode Genetics made an offer to the Icelandic government
Summary
In 1997 or thereabouts, Decode Genetics made an offer to the Icelandic government. The corporation was ready, at its own expense (plus paying a hefty license fee), to build and operate a national health sector database. The ideal solution would be to kill the Bill, but a second line of defense was to undermine the licensee’s control of the health records and raise its costs of transacting In their campaign against the HSD Bill, the opponents gave special weight to two issues: the monopolization of science in Iceland, and the threat to patient privacy. Three obvious ways of raising the licensee’s costs are: a) rules that require costly authorization from all patients before their records are entered into the database, and again when the data are used in a new project; b) requirements that the standards for encrypting the data be fail-safe (and unachievable); c) collective disobedience by the insiders when they are asked to transfer their records to the HSD. The second line of defense held, and the HSD project was abandoned.
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