Property Rights in the Knowledge Economy: An Explanation of the Crisis

Università Degli Studi di Siena Department of Political Economics Working Paper No. 586

17 Pages Posted: 12 Jun 2010

See all articles by Ugo Pagano

Ugo Pagano

University of Siena - Department of Economics

Maria Alessandra Rossi

University of Siena - Department of Economics

Date Written: March 12, 2010

Abstract

Some of the roots underlying the recent crisis may be found in the global convergence towards a model characterized by strong property rights and an extremely limited role attributed to “open science.” The modern economy has increasingly moved from an open science – open markets model toward a closed science – closed markets model. Paradoxically, while a non‐rival resource like knowledge becomes the most relevant input, small firms and new entrants find it increasingly difficult to be competitive with large and well established organizations. Such a model is progressively increasing the costs of investment in new knowledge, with important negative consequences in terms of overall performance of the economy. We argue that in the knowledge economy, overcoming inequality and the economic crisis can be part of a single coherent policy. If some essential knowledge is moved from the private to the public sphere, this is has not only desirable inequality‐decreasing consequences but can also contribute to re‐launching the economy, creating the conditions for a sustained development. In a knowledge economy, a supermultiplier could couple the traditional effects of Keynesian spending in time of crisis with the multiplying virtues human knowledge, moved from the private to the public sphere.

Keywords: Global Imbalances, Intellectual Property Rights, Financial Crisis, Knowledge Economy

JEL Classification: D210, F210, J240, L250, L430

Suggested Citation

Pagano, Ugo and Rossi, Maria Alessandra, Property Rights in the Knowledge Economy: An Explanation of the Crisis (March 12, 2010). Università Degli Studi di Siena Department of Political Economics Working Paper No. 586. Available at SSRN: https://ssrn.com/abstract=1624206 or http://dx.doi.org/10.2139/ssrn.1624206

Ugo Pagano (Contact Author)

University of Siena - Department of Economics ( email )

Piazza S. Francesco, 7
I-53100 Siena
Italy
+39 057 7232614 (Phone)
+39 057 7232661 (Fax)

Maria Alessandra Rossi

University of Siena - Department of Economics ( email )

Piazza S. Francesco, 7
Siena, I-53100
Italy

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