IF2 Presentation: FSX

[Robert Bushman]

Topic:
Free Software as Externality

Overview:
Free market economic theory relies on all costs being
accounted for in the price of a good, and all benefits
being appreciated in the purchase of a good. For many
products, the free market adjusts the price without
intervention. For some products, there are significant
externalities. Externalities are costs or benefits
that are a by-product of the manufacturing process,
which are not reflected in the final product.

An example of a negative externality is pollution.
It does not cost British Petroleum as much to pump
waste into a river as it gains from the manufacturing
that produces that waste.

The government balances negative externalities with
taxes - through the EPA in the case of pollution.
This increases the manufacturing cost of the good
to reflect the cost to society of the externality.

An example of a positive externality is Free Software.
Companies that are not in the software business, and
have no easy way of selling their software by-products
should be encouraged to externalize the value of that
software. For our free market economy to function
efficiently, companies should receive tax credits
for publishing by-product software under a Free Software
license.

--------------------------------------------------------------------
 "We need commonsense judges who understand that our rights were
 derived from God. Those are the kind of judges I intend to put on
 the bench." President George W. Bush, 27 June 2002
 http://www.nando.net/politics/story/453192p-3627921c.html

 "no religious Test shall ever be required" Constitution Article 6
 http://www.law.emory.edu/FEDERAL/usconst/art-6.html
--------------------------------------------------------------------