Skip to main content
×
Home

Club goods, intellectual property rights, and profitability in the information economy

Abstract
Abstract

Are club goods becoming more widespread in developed economies, and, if so, what is the broader significance of this trend? Club goods are as salient for the profitability of non-financial firms as for finance. First, corporate strategy today largely revolves around the generation or acquisition of intellectual property rights and other club/franchise goods. Second, financialization is not just about the credit relationship between financial firms on the one side and non-financial corporate and household borrowers on the other, but also about Main Street's ability to use financial power to suppress competition in its own markets. Third, firms’ strategic reliance on IPRs and club goods more generally has magnified both profit and wage inequality in the broader economy. This inequality combines with changes in corporate structure to produce a significant part of the household level income inequality we currently observe in the United States. Fourth, all these processes are ineluctably political, because the state necessarily constitutes club or franchise goods, just like any property right. But the quantity and quality of those property rights is an indeterminate outcome of struggles among firms over the size of and shares of the pool of profits in a given national and global economy.

Copyright
Corresponding author
* Corresponding author: Herman Mark Schwartz, Politics Department, University of Virginia Charlottesville, VA, e-mail: Schwartz@virginia.edu
Footnotes
Hide All

The author would like to thank John Echeverri-Gent, Peter Hall, Anastasia Nesvetailova, Ronen Palan and Bent Sofus Tranøy for discussion, comment, and criticism, and Steven Liao for help with data. Errors remain mine.

Footnotes
References
Hide All
Aglietta Michel. 2000. A Theory of Capitalist Regulation: The US Experience. London: Verso.
Autor David. 2003. “Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing.” Journal of Labor Economics 21 (1): 142.
Baily Martin Neil, and Bosworth Barry P.. 2014. “US Manufacturing: Understanding Its Past and Its Potential FutureThe Journal of Economic Perspectives 28 (1): 325.
Barth Erling, Bryson Alex, Davis James C., and Freeman Richard. 2014. “It's Where You Work: Increases in Earnings Dispersion Across Establishments and Individuals in the US.” National Bureau of Economic Research, working paper 20447. Chicago: NBER.
Bessen James, Meurer Michael, and Laurissa Jennifer. 2011. “The Private and Social Costs of Patent Trolls.” Boston University School of Law, Law and Economics Research Paper 11–45. Boston: Boston University.
Block Fred, and Keller Matthew R., eds. 2011. State of Innovation. London: Paradigm Publishers.
Boldrin Michele and Levine Daniel. 2008. Against Intellectual Monopoly. New York: Cambridge University Press.
Buchanan James M. 1965. “An economic theory of clubs.” Economica 32 (125): 114.
Van Dijk Bureau. 2015. “Osiris: Information on Listed Companies, Global.” http://www.bvdinfo.com/en-us/our-products/company-information/international-products/osiris (Accessed October 18, 2015).
Campbell John and Lindberg Leon. 1990. “Property Rights and the Organization of Economic Activity by the State.” American Sociological Review 55 (4): 634647.
Chandler Alfred. 1977. The Visible Hand: The Management Revolution in American Business. Cambridge, MA: Belknap.
Christophers Brett. 2016. The Great Leveler: Capitalism and Competition in the Court of Law. Cambridge, MA: Harvard University Press.
Demsetz Harold. 1974. Toward a Theory of Property Rights. Basingstoke: Palgrave Macmillan.
Dobbs Richard, Koller Tim, Ramaswamy Sree, Woetzel Jonathan, Manyika James, Krishnan Rohit, and Andreula Nicolo. 2015. Playing to Win: The New Global Competition for Corporate Profits. New York: McKinsey Global Institute.
Doctorow Cory. 2014. Information Doesn't Want to be Free. San Francisco, CA: McSweeney's.
Doidge Craig, Karolyi Andrew, and Stulz René. 2015. “The US listing gap.” United States National Bureau of Economic Research working paper w21181. Chicago: NBER.
Drahos Peter, and Braithwaite John. 2002. Information Feudalism: Who Owns the Knowledge Economy? New York: The New Press.
Dyson Kenneth. 1986. “The State, Banks and Industry: The West German Case.” In State, Finance and Industry. A Comparative Analysis of Post-War Trends in Six Advanced Industrial Economies, edited by Cox Andrew. Brighton, UK: Wheatsheaf Books.
Ford Motor Co. 2015. Annual Report 2015. http://corporate.ford.com/annual-reports/2015/index.html (Accessed June 8, 2016).
Furman Jason, and Orszag Peter. 2015. “A Firm-Level Perspective on the Role of Rents in the Rise in Inequality.” Presentation at “A Just Society” Centennial Event in Honor of Joseph Stiglitz Columbia University.
Gordon Colin. 1994. New Deals: Business, Labor, and Politics in America, 1920–1935. New York: Cambridge University Press.
Hall Bronwyn and Ziedonis Rosemarie. 2001. “The Patent Paradox Revisited: An Empirical Study of Patenting in the US Semiconductor Industry, 1979–1995.” RAND Journal of Economics 32 (1): 101128.
Hall Bronwyn and Ziedonis Rosemarie. 2007. “An Empirical Analysis of Patent Litigation in the Semiconductor Industry.” University of California at Berkeley working paper 217–242. Berkeley, CA: University of California.
Hardin Russell. 1982. Collective Action, Baltimore, MD: Johns Hopkins University Press.
Hurt Shelley. 2010. “Science, Power and the State: U.S. Foreign Policy, Intellectual Property Law, and the Origins of Agricultural Biotechnology, 1969–1994.” Ph.D. dissertation New School for Social Research.
Katz Lawrence and Krueger Alan. 2016. “ The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015. ” Unpublished manuscript Cambridge, MA: Harvard University.
Lazonick William. 2009. “The New Economy Business Model and the Crisis of US Capitalism.Capitalism and Society 4 (2): 167.
Lynn Barry. 2009. Cornered: The New Monopoly Capitalism and the Economics of Destruction. New York: John Wiley.
Mazzucato Marianna. 2013. The Entrepreneurial State: Debunking Public vs. Private Myths in Risk and Innovation. London: Anthem Press.
Online Mergent. 2015. http://www.mergentonline.com/basicsearch.php (Accessed August 30, 2015).
Organization for Economic Co-operation and Development (OECD). 2008. Growing Unequal: Income Distribution and Poverty in OECD Countries. Paris: OECD.
Organization for Economic Co-operation and Development (OECD). 2015. In It Together: Why Less Inequality Benefits All. Paris: OECD.
Olson Mancur. 1965. The Logic of Collective Action. Cambridge, MA: Harvard University Press.
Ostrom Elinor. 2010. “Beyond Markets and States.” The American Economic Review 100 (3): 641672.
Ostrom Victor and Ostrom Elinor. 1977. “Public Goods and Public Choices.” In Alternatives for Delivering Public Services: Toward Improved Performance, edited by Savas Emanuel. Boulder, CO: Westview Press.
Pagano Ugo and Rossi Maria. 2009. “The Crash of the Knowledge Economy.” Cambridge Journal of Economics 33 (4): 665683.
Piore Michael and Sabel Charles. 1984. Second Industrial Divide. New York: Basic Books.
Sabel Charles. 1982. Work and Politics: The Division of Labor in Industry. New York: Cambridge University Press.
Samuelson Paul A. 1954. “The pure theory of public expenditure.” The Review of Economics and Statistics 36(4): 387389.
Schacht Wendy. 2006. Patent Reform: Issues in the Biomedical and Software Industries. Congressional Research Service, available at: http://sharp.sefora.org/wp-content/uploads/2007/12/rl33367.pdf (Accessed April 7, 2006).
Schwartz Herman Mark. 2016. The Russell Sage Journal of the Social Sciences. 2 (6): 226249.
Sell Susan. 2003. Private Power, Public Law: The Globalization of Intellectual Property Rights. New York: Cambridge University Press.
Selmier II W. Travis. 2017. “An Institutional Perspective on Governance, Power, and Politics of Financial Risk.” Business and Politics 19 (2): 215240.
Shapiro Carl. 2001. “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting.” March. Available at SSRN: http://ssrn.com/abstract=273550 (Accessed September 12, 2015).
Song Jae, Price David, Guvenen Fatih, Bloom Nicholas, and von Wachter Till. 2015. “Firming up Inequality.” National Bureau of Economic Research working paper w21199. Chicago: NBER.
Stiglitz Joseph. 2012. The Price of Inequality: How Today's Divided Society Endangers Our Future. New York: W. W. Norton & Company.
Veblen Thorstein 1919. “On the Nature of Capital, I and II.” In The Place of Science in Modern Civilization and Other Essays, edited by Veblen Thorstein. New York: Huebsch.
Veblen Thorstein. 1963. The Engineers and the Price System. New Brunswick, NJ: Transaction Publishers.
Veblen Thorstein. 1978. The Theory of Business Enterprise. New Brunswick, NJ: Transaction Books.
Vitols Sigurt. 2001. “The Origins of Bank-Based and Market-Based Financial Systems: Germany, Japan, and the United States.” In The Origins of Nonliberal Capitalism: Germany and Japan in Comparison edited by Streeck Wolfgang and Yamamura Kozo. Ithaca, NY: Cornell University Press.
Weil David. 2014. The Fissured Workplace. Cambridge, MA: Harvard University Press.
Weiss Linda. 2014. America Inc.? Innovation and Enterprise in the National Security State. Ithaca, NY: Cornell University Press.
Williams Karel, Haslam Colin, Williams John, Johal Sukhdev, and Adcroft Andy. 1994. Cars: Analysis, History, Cases. Providence, RI: Berghahn Books.
Womack James, Jones David, and Roos Daniel. 1990. The Machine that Changed the World. New York: Simon and Schuster.
Zeitlin Jonathan and Herrigel Gary. 2000. Americanization and its Limits: Reworking US Technology and Management in Post-War Europe and Japan. New York: Oxford University Press.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Business and Politics
  • ISSN: -
  • EISSN: 1469-3569
  • URL: /core/journals/business-and-politics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Full text views

Total number of HTML views: 4
Total number of PDF views: 51 *
Loading metrics...

Abstract views

Total abstract views: 268 *
Loading metrics...

* Views captured on Cambridge Core between 6th June 2017 - 13th December 2017. This data will be updated every 24 hours.