Book Review: Gridlock Economy

Michael Heller coined the term “anticommons” to describe the inefficient over-allocation of property rights in post-Soviet Russia. In Gridlock Economy, he expounds in a popular setting (albeit thoroughly-referenced) on the ideas he has developed in the legal literature and elsewhere.

The seminal example of thriving sidewalk kiosks adjacent to the well-lit but empty Moscow storefronts receives an entire chapter. The reader is encouraged not to blame the thoroughly-credentialed World Bank advisors who helped create the legal labyrinth that was to blame for the underuse of the valuable storefronts (Heller for the World Bank advisors, and he, obviously, didn’t screw anything up—ignore the fact that the Russians lacked any people with a memory of capitalism, even of a Tsarist flavor, and had to rely on their Western advisors for advice in quickly establishing functional market structures under political constraints). The takeaway from that and most of the other stories is that anticommons problems are much more likely when the government tries to create new property rights from scratch, and doesn’t quite get it right. Beware PES. Sorry, experts.

The more interesting examples pertain to the cutting edge of the economy: the ultraviolet spectrum and the patenting of biomedical technologies. In the first case, the inefficient overallocation of the spectrum in the U.S. is implicated in the sub-standard quality of wireless broadband telecommunications. The second case is the crux of a debate over proprietary versus open-source research output, especially when prior work is requisite (as in the case of particular gene sequences) for further advances. Is the cure for cancer going undiscovered because researchers fear patent trolls?

The least satisfying chapter is the final one, in which Heller explores the economic history of oysters. While the common-property dimensions of the problem are apparent, and vividly illustrated in the rent dissipation of oyster wars, what is not clear is how we should think about oysters as an anticommons problem. Is it just that the Chesapeake is divided between Virginia and Maryland? Or that it took nearly two hundred years to negotiate a settlement? Prudhoe Bay took a long time to unitize, but not because of commons and bilateral monopoly problems as opposed to anticommons issues. Early in the book Heller acknowledges Buchanan and Yoon’s model of the anticommons as the theoretical analogue of the commons. However, the evidence that he presents in anecdotes throughout the book isn’t always clear about which problem has the upper hand. The spectrum and biomedical patent examples are transparent, as the spatial and legal anticommons in land. But in other cases, like oysters, it’s not so clear.

Heller’s core suggestions are well-taken. We should think about the costs of overdefining property rights in counterproductive ways. We should expand the English vocabulary in ways that word processors inject fewer squiggles under descriptors like underuse, anticommons, and overdefine. But the challenge of theoretically and empirically refining the anticommons concept remains. That said, numerous interesting research lines present themselves.