The economics of science

Article by Terence Kealey in an old issue of Scientific American:

It's a myth that science is a public good. Science is constructed in "invisible colleges"--small groups of people who understand each individual discipline. So the number of people who can really understand the scientific papers is few. To become a member of this club, you have to pay a very high entrance fee. [The late] Ed Mansfield, an economist at the University of Pennsylvania, showed empirically that the average cost to one company of copying the science of another company is 70 percent. But it's worse than that because you've also got to pay for the costs of information. The company has got to have enough scientists out there to read the papers, to read the patents, to go to the conferences, so that you actually know what people are discovering, so you know how to copy it. Add that to the 70 percent, and add the premium you pay in the scientist's salary for all the training he's gone into, and the costs of copying and the costs of doing things originally come out exactly equal. That's in Mansfield, and others have shown this as well.

Compare this to the recent paper by Gans and Stern.

Hat Tip to GV.