Market Tension
From Zanecorpwiki
The story of Golden Rice encapsulates everything that is right and wrong with markets. Golden Rice is a genetically modified rice that produces vitamin A, a key nutrient often in short supply in the developing world. Golden Rice has the potential to dramatically improve and even save millions of lives.
In some ways, Golden Rice is a story of market triumph. The genes and technologies used to create GR were discovered in large part because of property rights--in the form of patents--and the profit motive.
However, because those property rights were spread across dozens and dozens of independent owners, many of whom had effective veto over the entire project, the entire project was subject to the "the holdup problem"--a classic economic paradox in which economically valuable activity is destroyed because each rights holder with veto power seeks to maximize their individual profit. In other words, when you have dozens of rights holders each demanding 90% of the profit, then no one gets anything. Both the rights holders and society lose.
In this case, the roadblock was broken essentially through shaming the rights holders[notes 1], which is unfortunate. In an enlightened world, it seems clear to me (though I may be wrong) that the rights holder's should be happy to license such a product to the developing world for many reasons. One could never hope to make much off the developing world anyway, so take the humanitarian use, make a little profit and get the best ad campaign ever. Then license separately to the developed world and make a killing.
When I say enlightened, though, I don't just mean the rights holders, I mean the entire system. I'm sure part of the fear was that by licensing to the humanitarian project, the "genie would be out of the bottle" and then nations that could afford the higher price would end up just importing the rice or stealing seed. In other words, the market segmentation would be broken. It's an argument for strong contracts and uniform enforcement across all markets.
The market tension exists in many dimensions, and the problem is that there is no right answer. The legal/social framework for strong contracts doesn't exist, which may suck for rights holders and will surely cost them some money, but it's evil to use that as an excuse for letting people die. At the same time, say th rights holders had held up GR. It would be just as bad to force them to give up those rights--say through march in rights. It may seem like one could thereby save lives, but what about all the research and innovation that goes unfunded and how many lives that will cost?
The hard truth is that neither solution is correct. The only thing we can do is convince everyone to be rational, and that, of course, is quite hard.
Notes
- ↑ This claim is double hearsay.
