Monday, 4 October 2010

Regulating knowledge monopolies: the case of the IPCC

This paper, Regulating Knowledge Monopolies: The Case of the IPCC by Richard S.J. Tol, calls for regulation of the IPCC. The abstract reads,
The Intergovernmental Panel on Climate Change has a monopoly on the provision of climate policy advice at the international level and a strong market position in national policy advice. This may have been the intention of the founders of the IPCC. I argue that the IPCC has a natural monopoly, as a new entrant would have to invest time and effort over a longer period to perhaps match the reputation, trust, goodwill, and network of the IPCC. The IPCC is a not-for-profit organization, and it is run by nominal volunteers; it therefore cannot engage in the price-gouging that is typical of monopolies. However, the IPCC has certainly taken up tasks outside its mandate; the IPCC has been accused of haughtiness; innovation is slow; quality may have declined; and the IPCC may have used its power to hinder competitors. There are all things that monopolies tend to do, against the public interest. The IPCC would perform better if it were regulated by an independent body which audits the IPCC procedures and assesses its performance; if outside organizations would be allowed to bid for the production of reports and the provision of services under the IPCC brand; and if policy makers would encourage potential competitors to the IPCC.
Competition is the answer to monopoly. I'm not sure that the IPCC is a natural monpoly, its power comes from the fact that the World Meteorological Organization and the UN Environment Programme back it. Its power is therefore basically the product of "government" actions. The IPCC is the sole advisor to the international negotiations on climate policy under the UN Framework Convention on Climate Change. Remove such backing and the IPCC would have to stand on its own merits - such as they are.

Tol's call for increased competition is a positive move. But he could go further and call for an end to the IPCC itself and then let other bodies, national and international, provide what ever advise they wish. Why should a free market not work in the intellectual sector in the same way its works in other sectors of the economy?


matt said...

I wonder what the bidding would look like under competition.

"I'll give you .8 degrees by 2050 and 1.1 by 2070, and an extra 10 centimeters in ocean levels, and that is my best offer."

Can we presume that's the sort of bidding that (implicitly) goes on inside the IPCC right now?

Richard Tol said...

My argument indeed hinges on question whether the IPCC is a monopoly or a natural monopoly.

I argue that it's a natural monopoly, and then regulation is the answer.

I do not have strong evidence, though, and I know four people who strongly disagree with me. If the IPCC is just a monopoly, competition is the answer.