Editorial

Rowland Lorimer

The papers of this volume appear to make the case that monopolies (of knowledge or otherwise) are, prima facie, something to be avoided. From an economics perspective, monopolies probably encourage the inefficient allocation or exploitation of resources. The phone companies are a case in point. Look back a mere ten years when the average Canadian family had one rotary dial phone in the house. Multiple lines feeding multiple phones with memories, call forwarding, call waiting, call interrupt, and call recording capabilities, to say nothing of touch-pad tone dialing, are now common.

Are such changes the impact of the removal of the telco monopolies? Or were other factors at play? For example, was technological capacity appropriately suited to telephone monopolies from their inception through to about the 1970s, but eclipsed by technological development after that? There is certainly that possibility. In thinking about how deregulation came about, surely the case was not made solely on a theoretical anti-monopoly foundation. More likely it was argued against a background of already developed technological capacity and the desire of various players, including the telcos, to open up new markets.

Another interesting element of monopolies or near monopolies is their life expectancy. Take Microsoft for example. Microsoft makes its money selling the software equivalent of Cadillac Eldoradoes -- opulent office suites that have far more capacity than anyone ever uses, even occasionally. Onto the scene comes Java, a cross-platform language that seemingly will make it a little easier for us Mac users to communicate with IBM users and even UNIX users. Seemingly this has little to do with Microsoft's near monopoly in the marketplace, based first on DOS and then Windows. Looks deceive. Apparently, cross-platform capability requires an operating system that sits inside Java and, as Java becomes more and more used, there is potential for that operating system to replace Microsoft's near-monopoly in both operating systems and in opulent office suites.

Here is another perspective on monopolies. The force of intellectual property law is to allow for the time-delimited creation and exploitation of monopolies. Copyright provides weak protection -- for the expression of an idea -- for a long time: 50 years after the death of the author. It is weak because the idea can be paraphrased and not infringe on the original copyright. Patent provides stronger protection over a shorter period. Drugs are a good example. Drug companies have 20 years to fully exploit a patent before the generics are allowed to come into the market.

In the case of intellectual property, concern over monopolies is not focused on their existence. That most regard as inevitable and appropriate. More important is how these monopolies are handled. For example, Nair & Kumar (1994) point out in the introduction to Intellectual Property Rights that, according to the Union for the Protection of New Plants, the beneficiaries of any plant-breeding rights accrue only to those who "develop" plants, not to regions where valuable, naturally occurring plants are to be found. Even when a "developed" plant is created on the foundation of a naturally occurring plant unique to a region, no benefit flows to that region. Thereby, the design of plant breeders' rights favours pharmaceutical firms, usually in developed countries over developing countries with or without small innovators.

In a similar fashion, patent law favours the developed world. Patent holders may take out a patent in a developing country purely to protect the market from rival manufacturers and work the patent simply by importing it to the developing country. Patent holders from developed countries may also hold back seemingly unimportant information that is, in fact, absolutely essential for commercial success in working a patent. Current international trade law merely points innovators, who may wish to build on an existing patent, to obtaining the information from the patent holder in its country of origin, who may or may not be interested in sharing that knowledge. The patent holder may also attempt to discourage further innovation by making available only non-exclusive licences.

The point, then, is not the monopoly per se but the manner in which it is handled by regulation, both national and international. Laws could be set up to free up the exploitation of intellectual property rights rather than to create benefit mainly for originating companies and, hence, developed countries.

To bring this to a close, with only this mention of the rather awe-inspiring Reed-Elsevier/ Wolters Kluwer merger, there is probably no doubt that monopolies are, in most cases, counter-productive. But it may be equally probable that monopolies can be used by society for perhaps a greater social benefit than would result from breaking them up.

References

Nair, K. R. G., & Kumar, Ashok. (1994). Intellectual property rights. New Delhi: Allied Publishers.



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