The Tragedy of the Anticommons

I previously blogged about the Tragedy of Commons, and this is a follow up to that post. Briefly put, the tragedy of commons occurs when a common resource is overused. The solution to the tragedy of commons depends on the situation, but the most common is to privatize the property. This usually works, with resources like water being controlled by private companies. However, in certain situations issues with this solution will arise. If there are too many private owners of a resource, each owner can block the other’s use. This phenomenon of common resource underuse was first called the tragedy of the anticommons by Michael Heller, law professor at Columbia University.

The Tragedy of the Anticommons occurs when there are too many private owners of a resource, allowing individual owners to block access to other owners. An example Heller uses is of patents. If 50 people own a patent relating to resources used to create a product, each of them can block access to the resource. As a result, the product isn’t going to be produced AND the resources aren’t being utilized to their maximum efficiency. This underuse of resource is rooted in the social and economic system of the United States. The United States was founded on freedom, and economic freedom is a fiercely protected right. But with such heavy emphasis on private property and individual ownership rights comes the risk of the anticommons. Other examples Heller uses are technology, biomedical research, broadcast spectrum ownership, and even the music industry. All of these industries have a high risk of the anticommons tragedy, because of the wide ownership of key resources needed to produce the goods in those industries.

So, why don’t we learn about the tragedy of anticommons when we learn the tragedy of the commons? The answer is in two parts. One, the tragedy of anticommons is a relatively recent concept, with Heller’s research being published in 2010 compared to our textbook’s publication in 2005. The second part is more alarming. The tragedy of the anticommons is a hidden phenomenon, invisible until identified. It’s not an issue that builds in severity until dealt with, it’s one that is found or not found, and only once it’s found can it be dealt with. This is because opportunity costs are not visible, and the tragedy of the anticommons is essentially what happens when the opportunity costs of not producing. For example, nobody knows about that the anticommons blocked a new drug from being produced for the very reason that it was not produced. As Heller puts it, “Innovators don’t advertise the lifesaving cures they abandon”.

With that in mind, researchers found that the underuse associated with the tragedy of anticommons is more likely to occur than the tragedy of commons, and that fact, coupled with the invisibility of the tragedy of anticommons, makes this phenomenon very harmful to society. If we can’t identify that we’re underusing resources, we can’t fix the inefficiency and society suffers. In Heller’s words, the tragedy of the anticommons “wrecks markets, stops innovation, and costs lives. Our society needs to shift in order to understand the consequences of too much private ownership to address the growing issue of the tragedy of the anticommons.

http://wealthofthecommons.org/essay/tragedy-anticommons