Friday, November 5, 2010
In a brief talk, Carl Malamud argues that building codes and other legal materials should remain in the public domain rather than being put under the control of private owners:
I have some sympathy with Malamud's position, but I think his argument is way overbroad. As I've argued elsewhere (see here), there are strong reasons to think that state and local governments fail to innovate at an optimal level. Currently, a jurisdiction that produces a failed innovation is forced to shoulder all of the costs of its experiment. At the same time, a jurisdiction that crafts successful policies cannot stop its neighbors from copying its ideas and filching the benefits. Faced with this scenario, the rational government will prefer to copy the successful experiments of others rather than attempt to forge new solutions to tough problems.
Property rights could help. Granting state and local governments some kind of property right in their legal innovations would help them to better internalize the benefits of their risktaking, and would ultimately lead to more and better innovations.
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