Transcript Beijing1 - UCSB Economics - University of California, Santa

The Peculiar Economics of
Scientific Information
Ted Bergstrom
University of
California, Santa
Barbara
Traditional Goods
• With automobiles or
shoes, you have to
make a new item for
each user.
• Average cost is close
to marginal cost, with
some lumpiness for
factory size.
Traditional goods---allocation
and efficiency
How much to produce?
– Competitive solution: supply equals demand.
Who gets the output?
– Those who are willing to pay price
How are sellers induced to produce?
– Equilibrium price covers their costs.
Outcome is approximately efficient.
Information goods
• Scientific information,
once produced, can be
extended almost
costlessly to any
number of people.
• With electronic
technology, cost of
adding marginal user
is almost zero.
Cost structure for publications
• First copy cost
– Composing text and/or collecting data
– Editing and refereeing
– Type-setting
For paper journals about $100 per page
• Marginal cost per additional user
– Paper publishing---printing, handling, postage
– Electronic publishing---almost zero
– For paper journals about $.01 per page per user.
Average and Marginal Cost for
Publishing
Costs
Average Cost
Marginal
Cost
Quantity
Q of output
u
Information Goods Dilemma
• Since the social cost of allowing access to
additional user is zero, efficiency suggests
free access.
• But if access is free, how are suppliers
repaid for bearing first-copy cost?
Allocation Decisions
• For information goods, as for manufactured
goods decisions must be made about:
• How much and what to produce?
• Who gets the output?
• How to get sellers to produce desired
amounts?
Common Institutions for
Scientific Information
•
•
•
•
“Non-profit” Professional Societies
University Presses
For-profit publishers
Government agencies
Non-profit publishers
• Professional Societies societies publish journals,
books, data sets
• Usually charge subscriptions to libraries and
individuals to cover their costs.
– Some make a profit from their journal subscriptions and
use it for other activities
• Example: Science AAAS
• University presses, non-profit, enhance prestige of
university
For profit publishers
• Commercial publishers own journals,
charge subscriptions to libraries and
individuals in order to make profits.
• Since they own the copyrights to the articles
in their journal, they have a monopoly on
these articles.
• Prices are usually much higher than nonprofit journal prices.
Profit and Non-profit publisher
prices
(In US $)
Price per page
For-profit
Non-profit
Price per cite
For-profit
Non-profit
Ecology
1.01
0.19
0.73
0.05
Economics
0.83
0.95
0.70
0.89
0.63
0.17
0.15
0.27
0.10
0.19
2.33
0.88
1.32
0.23
0.38
0.15
0.07
0.28
0.04
0.05
Atmosph. Sci
Mathematics
Neuroscience
Physics
Advantages of Professional
Society Journals
• Societies lend prestige and attract top
authors
• Society journals are non-profit and usually
very cheap
• Society journals maintain very high quality
standards.
Disdvantages of Professional
Society Journals
• Societies tend to be conservative. Often
slow to adopt new ideas.
• Often controlled by an aging elite.
• Little incentive for officers of society to
invest effort.
• Too slow to expand into new fields.
New Economic Journals
• In 1960 there were 30 economics journals, all
non-profit, all cheap.
• In 1980, 120 economics journals, half forprofit, half non-profit.
• In 2000, 300 economics journals, 2/3 forprofit.
• Between 1985 and 2000, top ten for-profits
almost doubled their pages, top ten nonprofits increased 20%.
Entrepreneurship
• In the 1970’s economics profession was
growing rapidly. Society journals expanded
slowly.
• Specialized field journals were rare.
• North-Holland (and other companies now
merged into Elsevier) started about 30 new
journals.
• About 12 of these could now be called leading
field journals.
Disadvantages of Commercial
journals
• High prices to libraries mean access
only for the wealthiest.
• Scientists do the work. Publishers
collect the money.
• Great inefficiency in restricting access
to science when marginal cost of access
is zero.
What about tax-supported
government provision?
• Government could pay for scientific
publication without charge to users.
• But the answer is not so simple.
• There remain some
Tough
Questions
• How much to publish?
• When to start new
journals?
• How to decentralize
and avoid fiefdoms?
• How to control quality
without stifling
innovation?