Questioning the "excludability" of information

Friday, September 1, 2006

There are two sets of parameters in determining a type of Goods, namely (1) Rivalry and (2) Excludability. Excludability is the ability of producers to detect and prevent uncompensated consumption of their products. Rivalry is the inability of multiple consumers to consume the same good .

Examples of Excludability: If I own a land, I can put fence to prevent others from getting into it. If I have jewelry I can put it in a safe box.

Examples of Rivalry: If I eat an apple, the values diminishes, others can no longer enjoy it. That's what makes oil and golds are expensive: they are scarce.

What about information?

Information is originally a non-excludable Good. If I write a song, I cannot prevent you from singing it or changing my melody. Information is also a non-rival goods. I can sing as much as I want, but it doesn't consume it. Einstein had 'consumed' Newton's theory, but he does not deminish it instead but develop something else from it. So ideally, information is a public good.

But, since generating information takes cost, the Law changes the attributes of information into "non-rivalrous but excludable". So, it is the excludability that the Law changes. How? By installing the intellectual property regime. If I write a song, that song is mine, "excludable" from others. If you take my notations and sell it to a music recorder, I can sue you because it is my right (and will still be my right until 50 years of my death according to the Berne Convention and even 70 years according to EU Directive).

Does this scheme in "excluding" information (statutorily) an effective measure? Maybe not. Making boundaries to information is just not a natural thing to do and can only be done through coercion. It is really not the character of information to be limited. It wants to be free.

I will cite here, the characters of information according to Audrey Fenner:

  • Information is not necessarily a product of manufacturing.
  • Information can often be produced at little or no cost.
  • Each item of information is different from every other. If it is not different, it is not new information. The same product can be bought repeatedly from the same store, but information once provided or "sold" cannot be "bought" again since the "buyer" already knows it.3
  • Information may be exchanged, but exchange is not necessary. Receiving information can be an entirely individual, personal experience, and information can be received when a person is in contact with a non-human environment only.
  • Information is not necessarily scarce, though well-analyzed, well presented, and well-disseminated information is not always available.
  • Information is nonrivalrous. It can be consumed by one person and still be provided to others at no additional cost.
  • Information can have multiple effects, both positive and negative, often at the same time.
  • Information can be both stabilizing and destabilizing, often at the same time, for different subjects.
  • Information may be available yet not be provided where it is needed, and information provided is not always used effectively.
  • There is no such thing as perfect information, which would be the presence and effective use of all existing, applicable, necessary knowledge.
  • Information may be either subjective or objective, or both at the same time.
  • Unlike materials objects that either exist or do not exist, information can exist in part.
  • Information may be totally false or true, partially false or true, or neither false nor true.
  • Information is both a public good and a private commodity. One person's consumption of information does not necessarily reduce the amount available to others, its cost, or its value.
  • Information, unlike objects, cannot exist apart from value.
The next challange for economist is then, to attribute the correct price to information. As for lawyers, the challange is in maintaining a system which are not harmful to the market or in answering the question, to which extent would information be "excludable"?