Arnold Kling

Peer Production

Arnold Kling, Great Questions of Economics
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I got an email from David Reed that mentioned legal scholar Yochai Benkler. I Googled Benkler and found this powerful polemic, which is from last year.

Benkler draws a contrast between traditional economic activity and the alternative of "peer production." Academic research, open-source software, and web logs are examples of peer production, in which people add value to one another's work without the formal co-ordination of a boss or the pricing mechanism of a market.

Property is a hindrance, not an aid, when peer production of a good like information is possible...

Stakeholders from the older economy are using legislation, judicial opinions, and international treaties to retain the old structure of organizing production...Copyright law and other intellectual property, broadcast law, spectrum-management policy, and e-commerce law are all being warped to fit the hierarchical organizations of yesteryear. In the process, they are stifling the evolution of the distributed, peer-based models...

Benkler implies that the peer production model needs to be protected from the legal assaults of old economy producers, such as the court case that shut down Napster. However, I think that the peer production model is being held back by more than corporate legal belligerence. There are still some unsolved economic problems with the peer model.

The peer production model works well for academic research as long as the "customers" for research are fellow academics. Once the prospect opens for broader applications, the peer production model tends to break down. As Paul Romer points out (see post 1 in the first archive), somewhere along the line between research and implementation, markets tend to improve the outcome.

The problem, in my opinion, is to develop robust economic models for peer production. If content is going to be distributed for free, how are content-creators going to be paid? If software is going to be made available for free, how are non-technical users going to be enfranchised?.

Discussion Question. One fascinating aspect of the Internet is that there are "peering arrangements," by which the major networks agree to carry one another's traffic without requiring monetary compensation. Is there a way that this model can be applied to other endeavors?

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