Rival Goods Research Articles

Intrinsic adherence to law: physical versus intellectual property

Abstract Infringement of intellectual property seems to be much more common than infringement of physical property. Intellectual property rights protect goods that are non-rival in consumption, while physical property rights protect rival goods. Nonrivalry implies that the owner suffers no direct harm from infringement. This could explain lower respect for property rights in nonrival goods. To test this hypothesis, we isolate the dimension of rivalry in an experiment. We develop a theft game that offers plausible deniability and minimizes experimenter demand. We find no evidence, either in behavior or in social norms, that participants’ respect for nonrival goods is lower than for rival goods. This suggests that the widespread infringement of intellectual property rights is not due to their nonrival nature. We examine this result in a vignette study and find that stealing a nonrival good is more socially acceptable when the user’s valuation is below the price of the good.

Analyzing the Role of Service Congestion in Accessibility Modeling

An important variable in measuring potential access is the competitive nature of the service being provided. Health services such as physician visits or hospital beds are often viewed as rival goods where one’s consumption of a service will diminish another’s ability to consume the same service. Congestion at facilities is as important as the overall level of supply at facilities. For rival goods, accessibility and congestion are linked as reciprocal concepts. The relationship between accessibility and congestion is even more important in the current era of the COVID-19 pandemic because critical care services, such as the need for intensive care unit beds, illustrate the need to focus on a balanced level of congestion among hospitals to prevent care failure at the local level. This research investigates the role of service congestion in various existing and proposed models and measures using data from the state of Illinois. Because evenness of service congestion and lower travel times are conflicting goals, evenness of congestion as measured by Gini coefficients is weighed against the cost of travel to determine a compromise solution. Results suggest that the rational agent access model and the congested supply accessibility model provide such compromises when used in conjunction with the transportation problem.

Price and quantity competition with network externalities: Endogenous choice of strategic variables

AbstractWe consider the endogenous choice of strategic variable (price or quantity) in a duopoly market for differentiated goods in the presence of network externalities. We show that if the rival goods are substitutes in demand, but the degree of network compatibility is large enough to outweigh the substitution effects, each firm chooses price as its strategic variable. This finding is a rare exception to the usual result that if the goods are substitutes, each firm would choose quantity as its strategic variable. Moreover, we show that two non‐standard results hold when the above condition is satisfied and the efficiency difference between the two firms is large. First, the price of the less efficient firm is higher under price competition than under quantity competition. Second, in a situation where one firm sets quantity and the other firm sets price, the profit of the more efficient firm is higher when it is the quantity‐setter than when it is the price‐setter, and the opposite is true for the less efficient firm.

Sharing pollution permits under welfare upper bounds

We consider a pollution permit sharing problem: there are a finite number of countries and each country owns a fixed amount of permits and a technology. Each country’s output production is limited by the amount of permits it has and the permit is the only input for the technology. Permits are considered as rival goods and are perfectly transferable between countries. Technologies are nonrival but exclusive. Efficiency requires the permits to be able to be reallocated between countries so that the joint total production is optimal. The main question is how to share the total optimal output. A solution assigns to each permit sharing problem an allocation of the optimal output between the countries. In this paper, we consider two upper bounds for a solution. We define two coalitional games. The aspiration upper bound with given technologies (AUBT) game assigns to each coalition the optimal output the coalition can generate using the permits available from all the countries with the technologies available to the coalition. The aspiration upper bound with given permits (AUBP) game, on the other hand, assigns to each coalition the optimal output the coalition can generate using the technologies available from all countries with the permits available to the coalition. These two games define two natural welfare upper bounds for a solution. We show that both the AUBT and the AUBP games are concave (Theorems 1, 2). The Shapley values of these two games satisfy the two welfare upper bounds, respectively.

Pursuing the common goods: An economic theory of collective action among NGOs in transnational advocacy

ABSTRACTThis article integrates previous research on NGO behaviour with economic theory on collective action to create a generalizable and predictive model of advocacy campaign growth. It identifies three types of goods which NGOs may pursue in advocacy: unlimited, non-rival (public) goods; rival and excludable (private) goods; and rival but non-excludable goods. It then models an individual NGO’s decision to (not) join an existing advocacy campaign using a cost-benefit analysis conditioned by the presence or absence of competition for the good(s) sought by the NGO. This model of individual behaviour forms the basis for predicting collective action among NGOs with varying cost structures and pursuing a variety of rival and non-rival goods. The theory is illustrated using two cases of NGOs campaigning on World Bank policy.

Antirival goods, network effects and the sharing economy

Nothing facilitates large-scale collaboration like the prospect of inclusive, all-win games. Modern humans have gotten much better at large-scale collaboration because they have discovered, or invented, a broad range of collective goods that are easy to share and become more valuable the more they are shared, thus multiplying the opportunities for all-win outcomes. Steven Weber (2004) and Mark Cooper (2006a, 2006b) have drawn our attention to ‘antirival goods’ — subject to increasing returns to shared use — to differentiate them from ‘rival goods’ — subject to decreasing returns to shared use — and ‘nonrival goods’ — subject to constant returns to shared use. Unlike Weber and Cooper, I argue that nonrivalness and antirivalness are orthogonal properties of some collective goods, rather than stages along the same continuum away from rivalness. Collective goods, I also argue, are most inclusive when they are both nonrival and antirival. In an economy rich in both nonrival and antirival goods, the collaborative stance will often be the default collective choice, at large and small scales alike. Digital technologies are ushering in a transformative age as they expand the cornucopia of nonrival and antirival goods available to us. This inclusiveness of many digital goods eliminates the free-riding problem and mobilizes large amounts of volunteer work.

The Political Economy of Heterogeneity and Conflict

We present a conceptual framework linking cultural heterogeneity to inter-group conflict. When conflict is about control of public goods, more heterogeneous groups are expected to fight more with each other. In contrast, when conflict is about rival goods, more similar groups are more likely to engage in war with each other. We formalize these ideas within an analytical model and discuss recent empirical studies that are consistent with the model's implications.

The Lindahl equilibrium in Schumpeterian growth models

The main motivation of the paper is to determine the social value of innovations in a standard scale-invariant Schumpeterian growth model, which explicitly introduces knowledge diffusion over a Salop (Bell J Econ 10(1):141–156 1979) circle. The social value of an innovation is defined as the optimal value of the knowledge inherent in this innovation. We thus have to price optimally knowledge. For that purpose, contrary to what is done in standard growth theory, we complete the markets using Lindahl prices for knowledge. The Lindahl equilibrium, which provides the system of prices that sustains the first-best social optimum in an economy with non rival goods, appears as a benchmark. First, its comparison with the standard Schumpeterian equilibrium a la Aghion and Howitt (Econometrica (60)2:323–351 1992) enables us to shed a new light on the issue of non-optimality of the latter. Second, the Lindahl equilibrium also allows us to revisit the issue of R&D incentives in presence of cumulative innovations. Finally, this benchmark may be a first step to understand how knowledge is exchanged in new technology sectors.

The carbon implications of declining household scale economies

In the United States, average household size decreased significantly over the past half century. From 1950 to 2010, the number of households increased 72% faster than population size. In this paper we consider how this drift toward more and smaller households, occurring alongside rising affluence, undermines efforts to curb carbon dioxide (CO2) emissions by eroding household scale economies of consumption and associated CO2 emissions. To estimate the household scaling of CO2 emissions, we link consumer expenditure data to an economic input–output life-cycle assessment model. We find that the CO2 scaling benefits of cohabitation are compellingly large, with the carbon footprint of a representative person cohabiting with others being 23% less, on average, than if that same person lived alone. Additionally, we find that household scale economies: 1) decrease in income, reflecting the rise in the percentage of household expenditures devoted to more rival goods and services; and 2) increase intuitively in household size, reflecting the direct expenditure sharing benefits of cohabitation. The combined downward pressure on scale economies from declining household size and rising incomes, typifying the trajectory of developing societies toward more and smaller households and rising affluence, places significant upward pressure on CO2 emissions globally.

Costly Exclusion, Property-Rights Enforcement, and the Optimal Supply of Rival and Nonrival Goods

We analyze the optimal relationship between the public and private enforcement of property rights for the case of rival and nonrival goods. Exclusion is interpreted as a costly activity, which allows it to endogenize the distinctions between public and club goods on the one hand and between private and common-pool goods on the other. We characterize optimality conditions for the private provision of rival and nonrival goods, characterize optimal enforcement policies, and compare the solutions with other institutional alternatives.

Value Pluralism, Diversity and Liberalism

Fewwould disagree that contemporary society is characterized by ‘pluralism’, but what this means is widely disputed. Among the many senses of pluralism current in contemporary political theory, ‘value pluralism’ is one of the most keenly contested. The classic account is found in Isaiah Berlin, who sees basic human values as irreducibly multiple, often conflicting, and sometimes incommensurable with one another. Berlin seems in general to have believed that the pluralist outlook has an affinity of some sort with liberalism, although he does not make it clear what this affinity is. Other value pluralists, such as John Gray and John Kekes, have tried to sever pluralism from liberalism, instead proposing connections between pluralism and forms of conservatism or modus vivendi. In Kekes’s view, the true message of pluralism is that choice among rival incommensurable goods can be resolved rationally only by appeal to the relevant society’s established traditions (Kekes 1993, 1997). A problem here is that traditions often conflict. Consequently, John Gray believes, we need to replace or supplement tradition with modus vivendi: the adherents of competing conventions will have to compromise in order to achieve the peaceful resolution that is in everyone’s interests (Gray 2000). Such a compromise will not necessarily be liberal. This too has its problems, since modus vivendi seems to privilege the goal of peace, which for the pluralist can be only one consideration among others. Liberal pluralists have proposed various ways of re-establishing the link between pluralism and liberalism. In this paper I focus on what I call ‘the diversity argument’, the claim that value pluralism implies a commitment to a diversity of values that is best made possible, within a given society, by liberalism. This, too, has met with several objections, but I argue that these can be resisted. I begin by setting out the basic terms of Berlinian value pluralism, emphasizing the Ethic Theory Moral Prac (2015) 18:549–564 DOI 10.1007/s10677-014-9539-3

Some Consequences of Governmental Provision of Rival Goods

Much of the work in public finance assumes that taxes either pay for pure public goods or finance redistribution. Under this assumption, optimal taxation would be of the lump-sum variety, and the evaluation of actual tax systems becomes an exercise in determining the extent to which the requirement of using inferior tax instruments, together with other constraints, creates deadweight loss. In practice, however, many goods commonly funded with general tax revenues are rival in nature and, to that extent, mimic market-supplied goods in terms of the costs that their provision imposes and the benefits that their provision bestows. For such goods, lump-sum taxation is not an ideal.This paper explores some of the tax ramifications of government provision of rival goods. It also examines second-best problems arising in the transition from funding for such goods through generally-applicable taxes such as income taxes to taxes that better internalize the costs of supplying the goods.

Immigration and Voting on the Size and the Composition of Public Spending

This paper develops a model to analyze the effects of immigration by skill on the outcome of a majority vote among natives on both the size as well as the composition of public spending. Public spending can be of two types, spending on rival goods (transfers) and on non-rival goods (public goods). I find that the effect of immigration on public spending depends on preferences for the different types of spending. In particular, immigrants of either skill can increase (decrease) the size of total public spending, if natives have a relative preference for spending on public goods (spending on transfers). I provide some illustration of spending patterns in OECD countries during 1980 - 2010.

Home-country specific advantages and foreign investment of Russian oil and gas companies: a network approach

This paper uses a social network approach to explain the diverging access to home-country specific advantages and the propensity to engage in resource-seeking internationalisation. The density of social networks between firm elites and political elites is used as an explanation for the type of outward foreign direct investment by Russia’s largest foreign investors – firms from the oil and gas industries. The social network analysis is based on an original biographical dataset. It is found that densely networked firms have access to home-country specific advantages and show no particular propensity to engage in resource-seeking internationalisation. On the contrary, firms with loose networks have lesser access to those advantages and are ‘pushed’ to engage in resource-seeking internationalisation. The findings suggest that it is useful to distinguish different types of home-country specific advantages according to their degree of rivalry and excludability. The network approach is specifically relevant for excludable, rival consumption goods, if a stable institutional framework is absent. The findings also suggest that better institutionalisation of the state-business relationship would improve the performance of the Russian oil and gas industries.

Where Can Open Collaboration Thrive? A Model of Performance

Patterns of collaboration once observed mainly in open source software have mushroomed beyond it, constituting an important part of the informal economy. As the economic impact of, and the interest in, such open collaboration systems of innovation and production have increased dramatically, we contribute to explaining and predicting their performance. Marrying theory and evidence from the innovation literature with recent empirical findings on human cooperation, we develop an agent-based model to examine the performance determinants of open collaboration as a general system for the innovation and provision of products and services, such as Linux and Wikipedia. We define the phenomenal boundaries and identify three performance-related elements: cooperativeness in the population, need heterogeneity of participants and rivalry (subtractability) of the goods. In three studies, we vary those elements while observing the impact on system performance. Results suggest that performance is surprisingly robust, even in seemingly inhospitable environments with free riders, rival goods and homogeneous participant needs. Specifically, because cooperators stimulate contagious behavior, reasonable performance is achievable even when they constitute just a sliver of the population. In most realistic situations, free riders matter little. While low rivalry improves performance, high performance is possible even with rival goods as long as participant needs are heterogeneous. Participants with diverse needs are an advantage, but even homogeneous needs can often be satisfied. The results imply that open collaboration is likely to continue its expansion into new areas of innovation and production. They also resolve some prior puzzles, illuminate the possibility of cooperation between fleeting strangers and offer policy implications.

A Large Scale Study of the Small Sample Performance of Random Coefficient Models of Demand

Despite the importance of Berry et al.(1995)'s model of demand for differentiated products (BLP hereafter), there are few results about its finite sample behavior. In theory, simulation experiments provide a tool to answer such questions but computational and numerical difficulties have prevented researchers from performing any realistic studies. Those Monte Carlo studies which exist focus on only one market and often take computational short-cuts.For example, Armstrong (2011) uses only 10 pseudo-Monte Carlo quadrature nodes and fixes the scale of the random coefficients. Nevertheless, by utilizing recent advances in optimization (Su and Judd, 2010; Dube et al., 2011) and multi-dimensional numerical integration (Skrainka and Judd, 2011), I develop a fast, robust implementation of BLP and show that a large-scale simulation approach is now feasible.This study estimated BLP over 320,000 times and used 94,325 CPU-hours (See [sub:Computational.Cost] for further discussion.). I compute the finite sample behavior under both the traditional BLP instruments (characteristics of rival goods) and exogenous cost shifters using synthetic data generated from a structural model for realistic numbers of markets and products. This paper, then, has two objectives: to demonstrate the power of modern computational technology for solving previously intractable problems in Economics via massive parallelization and to characterize the finite sample behavior of the BLP estimator.

War and Relatedness

We find that more closely related populations are more prone to engage in international conflict with each other. We provide an economic interpretation based on two connected mechanisms. First, more closely related groups share more similar preferences over rival goods and are thus more likely to fight over them. Second, rulers have stronger incentives to conquer populations more similar to their own, to minimize postconflict heterogeneity in preferences over government types and policies. We find support for these mechanisms using evidence on international conflicts over natural endowments and on territorial changes, including decolonization.

Crosscutting Preferences Over Federal Spending on Rival and Non-Rival Public Goods and Services: Measuring Citizen Ideology with Results from an Interactive Questionnaire on Public Spending Preferences

This paper analyzes the relationship between fiscal preferences and ideology using an innovative survey methodology. An interactive questionnaire presented respondents with the President's requested budget for FY 2006 and asked them to adjust spending levels with respect to their personal preferences. By incorporating tradeoffs between spending dimensions, the responses capture the non-separable nature of the issue space and do so without compromising cardinality. As a result, each personally crafted budget has a straightforward interpretation as an ideal point. I first use the data to establish a relationship between fiscal preferences and self-reported ideology. I then perform dimensional analysis. Preferences scale to two substantive dimensions. The first measures the trade-off between security and non-security spending and is highly correlated with self-identification on the liberal-conservative dimension. The second dimension reveals a crosscutting cleavage that has attracted little, if any, attention in previous research. Specifically, it measures each respondent's relative preference for rival and non-rival government goods and services.

From Local to Global Public Goods: How Should We Write the Utility Function

The literature on public goods provision has experienced a significant increase since Samuelson's (1954) paper. The common goal is to make the model more suitable to describe a more general class of non rival goods. However, there does not seem to be a consensus in the literature on the form of the function to be used to describe the externality created by the public good. In this note we try to show the hypotheses underlying the functions used. The different models proposed are optimal when used in the right framework and this should be kept in mind when choosing the function in relation to the type of public good one wants to study.

Deepening Integration in an Enlarged EU: A Club–theoretical Perspective

The paper focuses on the problem of a simultaneous deepening and enlargement of the EU from the perspective of club theory. The EU can be perceived as a club that provides several non–rival but excludable goods to its members. Contrary to purely collective goods, for which the club size is infinite, club theory starts from the assumption that membership size is an endogenous variable, as is the provision level of club goods. In order to enhance the quality of EU governance, it is concluded that the increasing heterogeneity of EU members requires a systematic initiative of creating clubs within the club. The treaty agreed at the Nice summit in December 2000 has been as insufficient to meet these requirements as will be the Treaty establishing a Constitution for Europe.