Rival Goods Research Articles

On the economics of sustainability

The purpose of this paper is to work toward reconciliation of the neoclassical consumer choice axiom that “more is better” and the ecological concern that “more is not sustainable.” The key is to divide the desired “more” into its rival and nonrival components, for it is the consumption of rival goods (such as plastic) that strains the ecosystem. In contrast, the consumption of nonrival goods (such as bird-watching) leaves little to no footprint. While sustainability can be enhanced through changing preferences, a menu of taxes, subsidies and/or vouchers can also motivate greater nonrival consumption—and therefore sustainability—without reducing consumer welfare.

Time Horizons and Multilateral Enforcement in International Cooperation

This article examines the effects on international cooperation of the rivalness and excludability of international goods. Rivalness affects bargaining power when the negotiating states have different discount rates; with rival goods states with higher discount rates will be empowered, while with nonrival goods states with lower discount rates will be empowered. Excludability affects the enforceability of agreements once reached; multilateral agreements about nonexcludable goods cannot be enforced through retaliation-in-kind. As such, agreements concerning international toll goods are likely to reflect the interests of the state(s) with the lower discount rate(s), and be multilaterally enforceable. Agreements concerning international public goods should similarly reflect the interests of those with the lower discount rates, but be more weakly enforced. Finally, agreements concerning international common pool resources should both reflect the interests of those with higher discount rates, and be weakly enforced. The article concludes with some strategies to mitigate the negative effects on cooperation discussed.

When Should We Use Intellectual Property Rights?

The economic analysis of property rights proceeds in two steps. The first distinguishes rival from nonrival goods. The second contrasts the welfare effects of property rights for these two types of goods. For rival goods, strong property rights lead to efficient outcomes. For nonrival goods, property rights involve the trade-off formalized by William Nordhaus (1969): Weak property rights lead to under-provision. Strong property rights create monopoly distortions. Recent discussions of copyright protection for recorded music have obscured the underlying economic issues. Interested firms deny that music-sharing will reduce the incentives for firms to release new recordings. Artists and recording companies never acknowledge the efficiency costs of prices that far exceed marginal cost. It is left to economists with no stake in the outcome to clarify these issues. (Full disclosure: I have not consulted for anyone in the Napster case.) The stakes in the battle over the music business are small enough to get lost in rounding

Lumpy Demand and the Diagrammatics of Aggregation

Economists are used to sketching demand curves that do not reach the vertical axis. What happens to the demand curve at low quantities is often ignored, which is understandable if the relevant cases for analysis all have prices that intersect the demand curve at quantities measurably far from zero. Nevertheless, in textbook treatments of the summation of individual demand curves (horizontal for rival goods or vertical for nonrival goodst), the individual curves are pictured as nicely intersecting the vertical axis. The point of intersection is sometimes referred to as the choke price. In textbook treatments of aggregation, the demand curve is continuous, but not continuously differentiable, through the choke price. A hidden implication of this is that the inverse demand curve, which, abstracting from income effects, is the marginal valuation schedule, is represented by the same diagram. Adding the demand curves horizontally or the marginal valuation curves vertically poses no particular problem. In distinction to the usual treatment, we were motivated by the real possibility that small amounts of a good are worthless to the consumer. For example, a pint of gasoline would not allow one to operate an automobile in a useful way, but several tankfuls could be a valuable input toward vacation travel. Wheels for one's automobile are generally worthless until you have at least four; 20 feet of fencing may be worthless if your property line is 30 feet; a bridge spanning 40

Christian Life in the Church

During this week you have been listening-to many speakers on many subjects concerned with the Christian life in the modern world. They have spoken to you about the Christian life in the home; in the school; in work in the factory, the field and the office; in citizenship and Home Affairs; in Foreign Affairs and international relations. It has not been my privilege to hear those speakers, nor to hear what you have been saying about it all among yourselves. But know that those speakers have come to you from different ‘denominations,’ and from what I hear, I gather that they have nevertheless shown a pretty considerable measure of agreement about all these things. Perhaps you have been agreeably surprised; you had expected, perhaps, that they had all been anxious only to praise their own particular wares. Instead of which you have found, I believe, that about all these things they seem to think pretty much alike; and that instead of wanting to sell you their own rival goods you have found them all anxious only to be loyal and faithful to God and his Wood and to love and serve their neighbour in and for God. Now there can be no doubt that all this is a very good thing, and for it we must be very thankful to God. But the task which is set me this evening is—strange as it may seem—a much more delicate one. I have to speak to you about ‘The Christian Life in the Church.’ And that at once raises a question which perhaps has been haunting you all along.