Beyond Treaties and Regulation: Using Market Forces to Control Dual Use Technologies

Abstract

WMD technologies are increasingly available from commercial firms located all over the world. Scholars point out that traditional political initiatives based on regulation and treaty will have difficulty controlling this complex environment. By comparison, market forces routinely impose uniform, worldwide standards (e.g. Windows software, Blu-Ray video players) in many high tech industries. Recently, the companies in one such industry (artificial DNA) used these same economic forces to develop and implement a biosecurity standard. Surprisingly, the resulting standard is more stringent – and at least arguably more enforceable – than the US government’s own official guidelines. This article begins by presenting a short history of how private and public standards evolved in the artificial DNA industry. It then goes beyond this motivating example to ask whether we can expect private non-proliferation standards to be similarly effective in other industries. Next, it reviews what modern theories have to say about standard-setting in both government and the private sector. This analysis suggests that private standards should be reasonably feasible, stringent, and enforceable for many dual use industries. Furthermore, theory suggests that private standards will often reflect society’s risk preferences at least as well as public regulation. The article concludes by suggesting specific reforms for improving private and public standards-setting still further.

Keywords: Homeland Security, Biosecurity, Bureaucracy, Regulation, Network Effects, Standards, Synthetic Biology

JEL Classification: D72, D73, L15