PS 314 Final Exam

Subjective Risk

The perceived amount of risk based on an individual's or organization's opinion -perceived chance of something bad happening based on a person's opinion, emotions, gut feeling, or intuition

Vertical and horizontal monopolies

Vertical monopoly: Single company owns every aspect of business (i.e. production, distribution, etc) Horizontal monopoly: owns every business in an industry

Licensing patents

a revocable agreement between a patent owner and a licensee giving the licensee permission to use the patent -licensor gives up the right to intellectual property rights (usually for a certain amount of time) -during this period the licensee can make or sell the innovation or design; and can profit off of doing so during the licensing period -can have exclusive or non-exclusive licensing -exclusive: transfer all ownership rights the the licensee, licensor still holds the title and all patent owners must agree -non-exclusive: allows more than one licensee to produce a innovation or design advantages: limited risk for patent owner, global distribution, patent infringement (instead of suing license to still get some profit), limited time period disadvantages: soliciting manufacturers (finding someone to license to), low success rate, unable to negotiate with licensee

performance and quality metrics and indicators

how do we measure quality --> people don't like uncertainty and indicators help assuage people's concerns-ex: health grades, hospital quality by mortality and complication rates-people seize misleading or untrue things out of the psychological need to reduce uncertainty

knowledge assessment and knowledge-assessing institutions

how to assess the current state of scientific knowledge, and the changing of previous policy to update based on that new scientific knowledge -ideas must be conceptually sound and practical to implement -good for when technology, economic conditions, or other factors that come up proving policy is not as efficient as possible or is even harmful ex: ambient air standards from the EPA, new knowledge assessments of the health effects of selected pollutants are performed periodically, and each is then linked to a fresh policy assessment to determine whether and how the old standards should be changed -US air quality is regulated by EPA under the Clean Air Act for 6 pollutants EPA sets National Ambient Air Quality Standards in order to prevent pollution-caused health effects, areas are reviewed every 5 year to establish accurate scientific data -review is done by a mostly independent/isolated from the EPA advisory board called the Clean Air Act Scientific Advisory Committee -allows us to adapt policy to best suit the needs of the present

human, imagery, and signals intelligence

human int: informants and spys on the ground able to tell you what is going on -issues: unreliable, often have to rely on defectors who tell what we want to hear so they can stay, possible double agents), using people who already has serious grievances against current power and would like US to intervene imagery int: looking at satellite images and trying to extrapolate data from a few pictures -very difficult to tell what is happening/what things are, dual use technologies complicate, don't always present accurate image (ex: Iraq had one bomber production site and we got pictures of it, and we assumed they had many more production sites) -based on a few trucks, a forklift, and a mobile decontamination vehicle we assumed WMD PLANT! signals intelligence: communication interception -need to be deciphered -perhaps the most reliable

policy vs politics

policy: rules, laws, standards, and practices that determine how gov'ts provide public goods and regulate private activity politics: the organized struggle over the determination of policy and the power to implement it (and over how the resulting costs and benefits are allocated) elections=who gets to set policy policy that gets set outside of politics; EPA sets a policy for something it is outside of primary political stream because it is not voted on by politicians (although politics are still always involved! --> always some different/competing interest, competition among competing values) cant just let science determine policy because science also still has major competition, disagreement, and dispute over competing values; science is politicized

carbon lock-in

industrial economies have been locked into fossil fuel-based energy systems through a process of technological and institutional co-evolution driven by path-dependent increasing returns to scale -persistent market and policy failures that can inhibit the diffusion of carbon-saving technologies despite their apparent environmental and economic advantages

Montreal Protocol

phase out of ozone depleting substances CFCs -command+control phaseout of an entire class of chemicals, eventual ban on CFCs -international scope, triggered by depleting of atmospheric ozone above Antarctica -worked because: stiglerian incentives for regulation, there were major manufacturerers with alternatives, alliance between those manufacturers and environmental groups -also worked b/c Coasian bribes, multilateral funds established to offset cost of compliance for developing states

Market Efficiency (vs. fairness/equity)

self interested behavior produces most efficient outcomes (efficient= best result in comparison to the inputs to make the decision) -Market failure is when this fails to hold (ex: monopolies, externalities, uncoordinated standards, info asymmetries, uncertain property rights) -market strike most efficient balance in tradeoffs --> tradeoff between neg. health effects of pollution and cost of mitigating pollution Market efficiency: competitive market, many different buyers and sellers, makes it efficient because they will reach equilibrium, so they dont have an over or undershortage, and lowers profit margin so you are charging the marginal cost of the product --> only works when there is competition,

antibiotic resistance

the evolution of populations of pathogenic bacteria that antibiotics are unable to kill -any antibiotic is used = selective pressure on bacteria to evolve resistance to that antibiotics -very dangerous for human and animal health, we rely on antibiotics for food, basic health and safety, very difficult to create new antibiotics (about 10-12 years), most antibiotics come from natural sources and all the obvious ones have been utilized already --> only two new classes of antibiotics developed since 1970s externality problem: any antibiotic use (appropriate or inappropriate) in the present harms people in the future -also growing antibiotics resistance because: gene transfer across species, multiple drug resistance, poor practices at hospitals, indiscriminate use of antibiotics in animals, antibiotic use per kg of meat is in US is 6x amount in EU

Monopoly

the exclusive possession or control of the supply or trade in a commodity or service; many buyers but only one seller of a G+S -no competition -monopolies can increase profit margin and decrease innovation -can also be opposite; take overwhelming profit margin to enter new markets or increase innovation to make production even cheaper

Bell Telephone

the first telephone company; in 1913 AT+T becomes govt sanctioned monopoly, must provide independent local carriers access to long distance networks -AT+T did not have to interconnect independents with its own local networks -Western Electric monopoly supplier of Bell equipment -By 1940s AT+T controls nearly all of US telephone network, had a natural monopoly

"Me too drugs" (Priolsec and Nexium), Evergreening

-Drugs that are virtually the same, with minor differences that enable the companies to get a new patent, usually with minimal work -Priolsec: Proton Pump Inhibitor (PPI) introduced in 1989, it was the number one drug in the world making $6 billion (heartburn, acid reflux, damaged esophagus). Patent expires in 2001, by 2003 price drops dramatically due to generics and OTC. In 2004 they discovered additional uses for the drug, made minor changes to drug and marked it as entirely new --> Nexium -Nexium: Prilosec a mixture of (R) and (S) sterioisomers (mirror image of each other); Nexium is (S)-isomer. 3% of population metabolizes the 2 isomers differently, 97% metabolize it the same, thus technically it is not "bioequivalent" for 3% of the population. AstraZeneca won patent approval for Nexium, launched largeset marketing campaign in history to convice peopl to switch. Became the #2 drug on market behind Lipitor in 2000s, despite Prilosec's generic and OTC options Evergreening: a company extending the patent on something, or getting a new patent for a near identical product to continue their hold on the market, or by buying out or frustrating competitors for longer periods of time than would normally be permisible under the law

US vs EU standard setting

-EU has top down system and is much more centralized, quicker and more definitive process that they aggressively push to the ISO, standards are already international -EU has robust domestic and intl institutions to establish standards and promote them internationally -US uses more inclusive, transparent, and open standards process (better, more democratic) -US lacks central authorities to set standards, participate in international standards setting organizations -US relies primarily on market mechanisms -Increasingly private and gov'tl stakeholders will collaborate in standard setting process in USA via NGOs

dangers of not publishing potentially useful scientific data

-academic freedom -big difference b/n getting info from a journal article to putting it into practice, even if trained in that field -often needs lots of expertise to run these experiments, very specialized knowledge that can only be taught by doing it -H5N1 got published, nothing as of now has been restricted due to DURC policy

perceptions of risk and cognitive biases (representative heuristics)

-anecdotal vs. statistical evidence; ppl prefer anecdotal evidence even though it says basically nothing and usually not a direct link (death of 1 person a tragedy, death of a million is a statistic) -unintended consequences -illusion of validity -trust in experts -illusion of control -observability (more we know about something less afraid we are) -routines + the familiar --> false sense of security; ex: using elevator routinely in 100 story building risk is the same if its your first time, but first time feels more risky Representative heuristic: taxi cab problem -any test for something that is rare (even with high sensitivity and specificity) will still get many more false positives than true positives ex: taxi cab, cab can be blue or green but only 15% of cabs on road are green; witness reports for a green taxi will only be right 41% of the time but witness reports for a blue taxi will be right 96% of time -more FALSE POSITIVES than TRUE POSITIVES Representative Heuristics: failure to appreciate impact of false positives; dealing with something that is rare majority of time identification of those rare things are wrong

incentives for threat inflation

-evaluation of threat depends on estimates of present/future military capabilities and adversary's intentions -analysts must make decisions on how to present estimates to decision makers under conditions of uncertainty -decisions often made under uncertainty, short time horizons; better if WELL prepared FAR in advance so that way it is ready to go in time of emergency -those agencies like DoD want to inflate there power and influence so inflate threats to get more money from Congress

drug development and approval process

-gets approved by the FDA, which is responsible for the safety and effectiveness of prescription and over the counter drugs -company submits laboratory evidence proving safety in animal and then human clinical trials. The clinical studies go through four stages, and increase the number of participants in each stage to make sure that the drug is safe and effective to do what it says it does -FDA inspects the evidence and safety, determines how the drugs will be labeled, inspects the manufacturing facility, and approves the drug -takes on average 12 years, and FDA mandated testing costs over $1 billion

Clean Air Act

-most comprehensive environmental protection act in the world, regulates six atmospheric pollutants such as SOx, NOx, particulate matter, and carbon dioxide -particularly important because no bound by cost benefit analysis -Obama got carbon emissions from vehicles regulated via the Clean Air Act, and EPA has since begun pushing tougher regulations on light trucks and general emission standards for CO2

contributors to lemon markets

-naive consumer-misleading claims/labeling-certifications could be not valid/unnecessary-conflicts of interest, credit rating agencies, sponsored sites, gaming the reviews-metrics+indicators

Criteria for patenting

-new, non-obvious, useful, (and non-natural) new: not previously patented AND prior art non-obvious: to a person of ordinary skill in the art to which the patent pertains

security externalities

-non-malicious activities that create security risks for others (dual-use technologies) -important because collective action problems (ex: network security --> everyone in that network has to adopt best practices to protect the network) -security measures impose external cost on others (ex: anti-terrorism and civil rights/privacy)

politization of intelligence

-once there is a public presentation of intel findings of a potential threat politicians need to be seen to be working against that threat -happened in Iraq invasion; very limited evidence of WMD but it got out to the public and there were protests and pressures from the public on the intelligence communities to provide appropriate evidence -strong incentive once there has been published evidence that intelligence is looking into something to provide the public what they want to hear -leads to huge selection bias and cherry-picking evidence that supports what public/politicians want to hear

CROs (Contract Research Organizations)

-provides support for the biotech, pharmaceuticals, and medical industries through providing research services on a contractual basis -CROs streamline process and cut costs -DHHS IG report: CRO priorities are RAPID ENROLLMENT -#1 source of trial delay is recruitment -expansion of health coverage reduces pool of patients -move toward outsourcing (majority now abroad) CROs can be aggressive in recruiting participants, and it is getting harder to find recruits and CROs are going more international ex: India, patients are signing on esp if they may not have enough health care to begin with and typically have much less oversight, been many scandals

Challenges Addressing Nuclear Terror Risk

-securing weakest links (collective action problem)-perverse incentives, free-riding-uncertain risks-security culture --> secutity practices at nuclear sites, strict background checks, security system separate from management of plant workers, red teaming (war game, try to beat the system)Cooperative threat reduction:US supplying aid to Russia for them to beef up security at their nuclear facilities, Russia wanted aid but not US oversight/US contractors

Post-antibiotic era

14 classes of antibiotics developed 1940-1970 -only 2 classes of antibioitcs developed 1970-2014 -# of new antibiotics developed and approved has steadily decreased in past three decades, leaving fewer options to treat resistant bacteria ex: roughly 70% of all staph infections are now from methicillin resistant bacteria

natural monopolies

A market in which competition is inconvenient and impractical, and thus efficiency is best achieved by a single seller; cost is lowest when good is produced by a single firm -for increasing returns to scale (economies of scale are high), and high initial sunk costs -some companies are legally given monopoly rights, have to then regulate prices that the monopolistic/oligopolist can set ex: electrical power companies: very difficult to have multiple electricity providers in one area because of the high amount of infrastructure needed (high economies of scale), very important resource to all people, society depends on it, -try to chose an equilibrium that would be best for society while keeping the business alive -another example is Bell Telephone -technological change can erode a natural monopoly -govt will often grant antitrust exemption in return for regulation (pricing, min service requirements, common carrier assumptions)

BSE (Mad Cow Disease) and vCJD

A rare, fatal disease affecting the brain and central nervous system of cattle; transmitted through contaminated animal feed -turns into CJD in humans, and there is no treatment for it; shows up ten years after eating BSE meat -big outbreak in Europe that devastated farms and caused bans on exports of British beef -came from brains and spinal chords of cows that got tossed into other cattle feed to add protein and fatten up other cows Changes: -changing cattle feed, strict regulations for testing cattle, but will farmers comply? (great incentive to lie --> ID system to not hide cases) BSE testing in US --> BSE can rise spontaneously, FDA does random tests and test on symptomatic animals (less than 0.1% of US cattle), no ID program implemented, very strong beef lobby fighting regulations 2012 BSE case: -buying spent dairy cows for meat, a cow was randomly tested positive for BSE, they tried to hide it -FDA has ban on tissues that have highest risk of carrying BSe, spinal chord and brain tissue of cows over 30 months old -very strong lobbying, so much so the USDA has a culture of thinking of the industry as the customer, highly concentrated on a handful of companies

epidemiological studies

A study that involves large-scale comparisons among groups of randomized people, usually contrasting a group known to have been exposed to some toxicant and a group that has not -looking at the difference in outcomes between exposure and no exposure, randomized to control for confounding variables -more people in study=more statistically significant the finding -great for establishing hypothesis and looking at widespread effects of toxicants, but doesn't have as significant causal power as a true clinical experimental trial would

Daubert Standard (1993)

A test of scientific acceptability applicable to the gathering of evidence in criminal cases -can bring in expert testimony that is outside of the scientific mainstream, provided that research was conducted through accepted scientific methods and quality of research; research design appears convincing enough for a judge to make a decision -JUDGE is gatekeeper (whether expert testimony based on "scientific knowledge" will be allowed or not ISSUE: gives judges power to include or exclude info, but most judges and jurors are not scientifically qualified to make decisions on scientific outlier studies -uses a "more likely than not" standard for reliability ISSUE: pseudo experts BUT outlier doesn't necessarily imply wrong; relying on evidence from old tests that are unreliable such as polygraph test, fingerprints, bite test -lots of emphasis on presidence --> if allowed in past than it will likely be allowed again

Frye Standard (1920-30s)

A test to determine the admissibility of scientific evidence in court -cannot be accepted in the court as scientific evidence unless it is established in the field -ie consensus in the scientific community -excludes outlier experts from coming in -protects from pseudo experts and bogus studies but outlier does not mean wrong

standards war

A winner-take-all situation in which firms with different product designs compete to make their design the industry standard -US is "losing" the war --> they are not pushing hard to make standards -US doesnt adopt ISO and not good at getting US Standards passed Standards get set by: market forces, govt, NGOs, can be voluntary or mandatory, possible licensing candidates -EU has top down system and is much more centralized, quicker and more definitive process that they aggressively push to the ISO, standards are already international -US uses more inclusive, transparent, and open standards process (better, more democratic) -US lacks central authorities to set standards, participate in international standards setting organizations -US relies primarily on market mechanisms -Increasingly private and govtl stakeholders will collaborate in standard setting process in USA via NGOs

Cross Licensing Agreement

An arrangement in which a company licenses valuable intangible property to a foreign partner and receives a license for the partner's valuable knowledge; reduces risk of licensing. -often happens to avoid litigation, or to settle an infringement dispute -Very often, the patents that each party owns covers different essential aspects of a given commercial product. Thus by cross licensing, each party maintains their freedom to bring the commercial product to market -The term "cross licensing" implies that neither party pays monetary royalties to the other party

Gas tax vs. Cap+Trade

Both effectively price carbon emissions, have same practical effect of limiting carbon emissions -Cap+Trade can mask costs of compliance by freely distributing initial permits (but losing out on revenue) -taxes are a tough political sell Differ in terms of price sensitivity and uncertainty Uncertainty: gas tax =uncertainty in how much CO2 will be emitted but cost is appropriate, C+T know how much CO2 will be emitted but pricing uncertainty Gas tax: federal tax of 18.4 cents/gallon, (24.4 for diesal) + state and local taxes on average an additional 31 cents per/gallon (large variation between states) -been the same for past 21 years, was previously 18% of gas price now 5% -gas fairly inelastic to price, a 10% price increase would lower gas use by 1% -strong political opposition to taxes -tax revenues not used to compensate biggest losers (low-wage workers) Cap+Trade: -requires permits for CO2 emissions, permits can be publicly traded

Pigouvian tax vs. Command+Control

Both to resolve externalities (pollution, infrastructure upkeep, negative health and environmental consequences) Pigouvian tax: ex: gas tax, artificially inflate price of good to reflect environmental costs; increasing price decreases demand for driving, encourages innovation -difficulties: people still need to drive places, people don't purchase more fuel efficient vehicles unless price change is incredibly high if they have a working vehicle -advantages: internalizes cost of externalities, tax revenue allows for targeted redistribution -disadvantages: equity problems, assumes elastic demand, difficult to sell politically, requires constant adjustment, uncertainty about tax amount Command+Control: telling companies what they can+can't do, such as with bans, quotas, and limits -ex: how much pollution they can produce, average gas mileage across vehicles has to be at a certain level -forces innovation but comes to a standstill once quota is met, unlike a tax which gives constant incentive to continue cutting costs

Product Tying

Buying one product requires the purchase of another product -for antitrust action in US, must substantially affect tied product market; Clayton act prohibits (most) product tying -new technologies increasingly challenging antitrust standards on typing -ex: printer and ink cartridges, printer is designed to only take one brand of ink cartridges

nuclear export controls

Comprehensive controls requiring the licensing/authorization for the export of nuclear material, facilities, equipment, and technology, and any other "dual use" technology that could contribute to making nuclear weapons

tradeoff between controlability and credibility

Controlability: control research to say what you want it to say, causes a lack of scientific credibility -controlling usually done by gov't agency, particular supervisor choosing an organization to conduct a study (will chose an org that will give stamp of approval --> typically for profit, have incentive to do so to get business in future) -go to a controllable agency when you want to demand additional support for a policy Credibility: completely independent and depoliticized analysis of scientific knowledge, however findings might not match the policies one would like to support -often credible org is one that is entirely independent and that has to publish full reports on their findings, even if those findings go against the people who hired the org to do the research (ex: NIH, national academies) -go to a credible source when don't want to be responsible for a decision (remove responsibility for whatever choice gets made, and don't have to pay the political cost of that decision)

International Atomic Energy Agency (IAEA)

Cooperates with partners worldwide to promote safe, secure and peaceful nuclear technologies-fully declaring everything the have related to nuclear-can't MAKE anybody do anything but is a reporting agency that proves if a country is adhering to int'l standards + safety precautions-Comprehensive Safety Agreement covers both correctness and completness-ex: cameras in nuclear facilities can't be tampered with, measuring intake and output of uranium-important because international agreement, health and safety, voluntary but often required for nuclear technology transfers

software patents

Copyright law protects source code, object code, and screen display, but not necessarily the functional ideas -A computer software program can be patentable as long as it meets the other requirements of patentability, and as long as the patent attorney is very careful to draft the "claims" in the patent application to include language showing that the physical parts of a computer are an essential part of the invention. -Algorithms cannot be patented, but what the software does and how it does it can -often a patent on an abstract concept capturing a potentially broad categoy of technological solutions to problems -considerable uncertainty about what patents cover, whether they will be upheld in court, or even whether a given patent exists Blackberry: Individual had a patent for systems that access email via wireless devices, but didn't actually use the patent. Claimed Blackberry infringed on patent, offers to license the patent to them. Ultimately settled. Creative vs. Apple: Creative sues Apple for patent infringement over iPod mp3 menu. Settles out of court w/ Apple paying $100 millions for permisions to use design. Steve jobs calls meeting, demands everything Apple does gets patented. Typically software cases settle out of court--> case goes away but no court law is made to set a precedent for similar future cases Amazon: B+N uses Amazons one click service, amazon sues for patent infringement for one-click violation, B+N says said 1-click was very obvious, B+N one

CAFE standards

Corporate Average Fuel Economy standards, command+control limit on fuel economy of new cars sold in US -established fuel efficiency standards for passenger cars and light trucks, average of manufactures cars had to average at least 27.5 mpg until 2010 -separate standards for light trucks until 2010, some large vehicle exempt -historically cars have been above standards, light trucks have been below but when averaged together manufacturers are still below fuel efficiency standard -important because of Jevons paradox, limiting externalities, and eliminating market failures such as free riding for infrastructure

Race to the Top ("California Effect")

Countries or states with a lot of political or market power can set higher regulations and companies will fall in line in order to sell to these large markets; higher standards than nationally necessary -most common outcome is stable heterogeneity: regulatory differences dont converge even when trade barriers lift When RTT likely: product, high asset specificity, high market power, large k group, low cost of regulatory adjustment -ex: double hull oil tankers, auto emissions

US Antitrust (Sherman and Clayton Act)

DOJ, FTC (Federal Trade Commission) most responsible for antitrust actions (via courts) -Authority stems from Sherman, Clayton, and FTC act Sherman Act: prohibits contracts, combinations, and conspiracies in restraint of trade; monopolization, attempts to monopolize, and combinations or conspiracies to monopolize Clayton Act: defined anticompetitive acts more clearly, outlawed price discrimination, tying clauses and exclusive dealing agreements, mergers between competitiors FTC Act: Created a special agency that could perform both investigatory and adjudicative functions; outlawed "unfair methods of competition" Antitrust suites not motivated by strictly (or even principally) by economic efficiency -ex: protecting small businesses even if it is not economically efficient

regulatory divergence on GMOs

Currently GMOs are not labelled on all products in the US; Oregon had a referendum to try to get GMO labeling but it was voted down -EU has different regulations on GMOs than the US; must label everything, even to the point of not using the same shipping containers that held GMO products in them -GMO is a transgenic plant, plasmid removed from bacteria, implanted into bacterium which is implanted into chromosome of plant cell; all cells carry foreign gene and express it -little to no evidence GMOs impact human health -Actual concerns with GMOs: secondary pests, weak oversight and monitoring, economic + social benefits very questionable, EU has precautionary approach, may introduce toxins or allergens, patent issues, industrial farming -EU has precautionary approach, problem: nothing is 100% safe, barrier to entry from GMO sources, doesn't want to be forced to buy new seeds every season + most GMO companies are American -important b/c US-EU convergence will lead to global convergence, other countries are hesitant to fully implement one system or the other to continue trading with those countries and to save costs if there are future global standards and they choose the wrong system, WTO enforcement is not feasible so no help their -high transactional costs and slowing of GMO innovation for other countries who have to follow two different standards, cuts off trade possibilities with countries of the other standard -Even if WHO decides to favor GMOs EU still unlikely to enforce standards b/c they are so entrenched, other countries can put tariffs on EU goods hurting their economy -if let EU win then losing out on a huge market and benefits of GMOs (more robust, cheaper crops)

DURC Policy

Dual-Use Research of Concern -research that based on current understanding, can be reasonably anticipated to provide knowledge, products, or tech that could be directly misapplied to pose a threat to public health+safety, agriculture, the environment, the material -based on "select agents list" of pathogens and biotoxins (FBI enforcement) -focused on matials, personnel, knowledge -mostly depends on self-identification by researchers -mixture of centralized/decentralized oversight -highly contentious, anything could be used to create some sort of threat, esp when restricting access to scientific info/research

GMO labelling

GMOs were going to be called bioengineered organisms (NOT GMOs)-excludes any refined products --> industry argues refinement process will remove any protein from GMOs making it indistinguishable from non-GMOs-has to be labelled if GMO content is above 5%-issue: people should be able to make up their own minds, lack of credible scientific evidence saying they are harmful, act of labelling implies they are, potentially help trade disputes with the EU, US label standardization vs. individual state rules, probably have an RTT

Nuclear Nonproliferation Treaty (NPT)

Goal of international efforts to prevent countries other than the five declared nuclear powers (United States, Russia, Britain, France, and China) from obtaining nuclear weapons.-set of formal rules, international law, and norms that control technologies related to nuclear weapons, almost every country of the world has signed on-non-nuclear weapon states forgo weapons-nuclear weapon states work toward disarmament-nuclear weapon states share civilian nuclear technology (ex: for electricity)-NPT does not forbid fuel cycle

Standard setting organizations

Govt, NGO, national, and international -ISO (International Organization for Standardization) -NIST (National Institute of Standards and Technology) -ANSI (American National Standards Institute) Standards get set by: Market forces, governments, NGOs, can be voluntary or mandatory, possible licensing conditions

IBM-PC/Intel/Microsoft Case

IBM-PC: had an open source design, so it opened up a ton of companies making IBM PC compatible software and devices --> network effect, drove more and more people to buy IBM-PC and compatible products Window-Intel Standards had almost the entire market, 96% of global market share of personal computing platforms between 1998-2005, in 2012 it was 35% (there was nothing super special about product, its who IBM chose to get licensing from, IBM was free Microsoft Case: 1994 agreement between DOJ and MS: no tying -US vs Microsoft: US District Court rules MS a monopoly, order breakup (overturned on appeal). MS loses claim that IE a "feature" of Windows is not a tied product -Opposition said IE can be hosted on MacBooks, so it is a tied product, and that its removal caused malfunctions in Windows -Settled where MS agrees to provide its APIs (application programming interface) to other companies but wasnt actually forced to change any of its practices

intellectual property (IP) and Intellectual Property Rights (IPR)

IP: A product of the intellect, such as an expressed idea or concept, that has commercial value; knowledge as a commodity -intangible -debated because knowledge has a marginal cost of zero so theoretically the cost should be zero, but without patent rights the innovator would get nothing and there is very little incentive to create -knowledge is indivisible: an unlimited number of people can consume the resource without depleting it for others -intellectual property has difficulties with appropriation: once the knowledge is out there it is impossible to stop people from using it and sharing it at a lower cost - IPR: A right of a person or company to have exclusive rights to use its own knowledge, and other intangible processes without infringement by others for a period of time. This gives a company or person a monopoly on knowledge so there is no competition among others. These rights can include patents, copyrights, trademarks, and trade secrets. If infringement has occurred it is up to the patent holder to sue the other party in court.

Bargaining and Influence Costs

Influence Costs: there are costs to any organization, esp large ones, in making sure its agents are acting in the interests of the organization and not themselves -also bargaining costs a lot in higher experts, advertisements, and other lobbying practices

tacit knowledge

Knowledge that is difficult to transfer to another individual since it is internalized and often based on experience-ex: lab experience, issue for dual use technologies but would writing about something in a scientific paper allow even people in the field to recreate thing for malicious purposes

Market based vs. Command+control forms of regulation

Market based: pigouvian taxes, cap and trade -effect of pigouvian taxes: short and long-term decreases use product, encourages continual innovation to reduce costs when -difficult to set taxes, pass them politically, offset costs to low wage workers -effect of cap+trade: encourages innovation when possible, not as much as a tax but the more innovation=more credits they can sell to another company -difficult to set, industry wide permission to pollute even if individuals reduce their particular emissions, will know how much pollution is being created but will price of credit reflect cost of externalities Command+control forms of regulation: bans, quotas, limits -effect of bans: takes care of item but if no reasonable substitue causes problem, equity issues if what was banned was used more by low-wage workers

Efforts to Control Nuclear Technology

Nuclear non-proliferation Treaty (NPT) --> non-proliferation regime, set of formal rules, international law and norms that control technologies related to nuclear weapons, almost every country in the world is a member of NPT-important, tradeoffsNPT: non-nuclear weapon states forgo weapons --> we will not develop them-nuclear weapon states work towards disarmament, freely sharing civilian nuclear technology,International Atomic Energy Agency (IAEA) --> fully declaring all nuclear tech a country has, can't make anybody do anything but it is a reporting agency that proves if a country is adhering to safety precautions (ex: cameras, measuring uranium amounts)-important because of int'l sanctions, extent of authority of other countries gov'tsNuclear Suppliers Group --> # countries who sell nuclear tech agree on list of things they won't sell (ex: centrifuges to enrich uranium)Bans on certain materials, types of facilities-Intel, coercion, military force

Nuclear renaissance

Nuclear: lower external costs, price volatility than other electricity production methods -historically not been competitive to carbon-intensive alternatives due to high initial costs, societal discontent, and waste storage issues -seemed like there might have been a revival of nuclear energy plant construction in the mid 2000s, this growth was largely from China and India desperately seeking new electricity methods -new nuclear plant construction tapered off in 2011 and does not seem to be growing -despite lack of new plant growth nuclear is producing about 2500 TWh of energy, and in 2014 was 9% of the energy market -competitiveness per unit of energy is very similar to coal and lately gas as far as operation, maintenance, and fuel goes (does not include indirect costs and capital) -with start up costs nuclear is more expensive than natural gas, wind, coal, and geothermal

Monsopoly

One or a very small number of buyers in a market -can push prices down because they have so much leverage -ex: Defense department, and is why ppl want a single payer healthcare system (gov't is only one buying pharmaceuticals)

Carterphone

Previously couldnt connect any non-Western Electric device to Bell system without a license -monopoly squelches innovation, lots of technology paths are shaped by structure of regulations and what the market wants Carterphone: Could call on telephone and get connected to radio network such as a walkie talkie, good for workers out in the fields, in cars -FCC decision ruled could connect any device so long as it did not negatively interfere w/ the Bell system -Allowed rapid innovation of new technologies: answering machines, computer modems

Media Sensationalism, role of science in the media

Process whereby the media attempts to increase the dramatic content of an issue or story by reporting on studies that challenge what we think we know or the safety of something -Media has a tendency to treat all scientific studies as equally valid (false equivalence) , so as long as you can find ONE scientific study promoting a claim, even if there are 19 others disproving it, the ONE will get aired on the media and sensationalized -studies reported on are not necessarily PRACTICALLY significant, but rather statistically significant -media wants to convey false sens of neutrality by presenting both "sides" of an issue -causes public panic and lawmakers need to look like they are doing something in the face of that public uncertainty, even if those actions are not scientifically sound ex: breast cancer case, science says screenings start at 50 and once every 2 years, public outcry demanded insurance still keep coverage age at 40 and recommendations essentially remained the same

data privacy/Safe Harbor/right to be forgotten

Protecting the privacy of peoples personal data located in a database -US has weak privacy regulations, info you provide can easily be bought and sold -EU protections are much more stringent Safe Harbor: informal arrangement between EU and US, US companies can opt into EU privacy standards to gain access to that market -model for regulatory divergence where it is really hard to bridge the gap Right to be Forgotten: have the right to delete internet content for past events in life that are no longer ongoing -ex: getting rid of incriminating pictures and videos so they cannot come up in future searches

Bell Labs

R+D arm of AT+T 1925-1983 (Bell Breakup) -Innovations include transistor, laser, early computing development of TV, photovoltaic cell, radio astronomy--> afraid competitors would come up w/ tech to defeat telephone service, longsighted R+D investment -8 Nobel Prizes awarded to Bell Labs -Currently is greatly scaled down under a different names

regulatory divergence and convergence

Regulatory divergence: inconsistent regulation between different jurisdictions; variation in regulation, different regulatory standards across markets, patch work of regulation, can see which regulations work the best in other places, although things tend to get locked in even if clear evidence other regulations work better because resistance to change Regulatory Convergence: a process whereby the regulatory requirements across countries or regions become more similar or "aligned" over time as a result of the gradual adoption of internationally recognized technical guidance documents, standards and scientific principles, common or similar practices and procedures, or adoption of regulatory mechanisms that might be specific to a local legal context but that align with shared principles to achieve a common public health goal

Schumpeters thesis and anti-schumpeter

Schumpeter: monopoly --> innovation monopolists don't worry about cost-cutting, so can invest in R+D w/ less risk, monopolists can capture all the gains of R+D, monopolists concerned about long-run technological change -Key assumption in Schumpeter argument: in competitive markets, firms innovate to cut production costs -in monopoly markets monopolists seek game-changing technologies to anticipate radical innovations that could allow competitor to enter market Anti-Schumpeter: competition --> innovation To compete, firms need to innovate to cut costs + differentiate products, short term survival vs. monopoly is long term, competition cant invest as much

Standards and Transaction Costs

Standards: Explicit or implicit rules for how system components are designed, constructed, used, measured, or operate -purpose of standards is to facilitate interchangeability and interoperability of components and systems -standards decrease barriers to international trade -used to promote societal goals (ex: quality and safety standards) -in Great Fire of Chicago firefighters couldnt connect hoses to the fire hydrants because of different standards Standards get set by: market forces, govt, NGOs, can be voluntary or mandatory, possible licensing candidates ex: traffic lights, hospital signs, Transaction costs: the expenses of negotiating and executing a deal -increases efficiency, no need for time or resources to switch to a different standard ex: paper sizes are different in US and other countries, increasing transaction costs in time and resources of getting equipment to process both sizes and/or converting one to the other -shipping containers are the same internationally, no changes need to be made during international shipping

Liability

Strict: responsibility for all harm falls on producerNegligence: responsibility for harm below legal threshold of precautionLimited: only up to a fixed amountimportant because of human health and safety, regulation issues, how far does liability goex: lead paint, regulation/enforcement, required disclosure in pre-1978 if lead is known, abatements and renovations require certification, renters must provide info, test, CDC requires blood testing-companies can be sued over products, like Sherwin-Williams over lead-based paint used pre-1978-landlords liable if knowingly violate law, cannot discriminate-some states: buyers can demand test-also affect of potential hazards on other behavior, like lead and crime

dual-use technology

Technology that can be used for civilian or military purposes -any tech not intended to be a weapon, but could be used as one (broad, almost anything could qualify) -ex: nuclear, spent fuel rods can theoretically be used to make nuclear bombs -important because we want to spread use of nuclear power plants for electricity, but has an security externality when selling nuclear civil technology abroad + feared spent fuel could be enriched to make nuclear weapons -ex: biotechnology

U.S. Patent and Trademark Office (USPTO)

The agency responsible for granting U.S. patents and registering trademarks. (Protects Corporate Property) -patent seekers must file with USPTO; they only grant a small number of patents because they must be new, non-obvious, and useful -patents also cannot be non-natural!! (ex: cannot patent a gene unless you change it in some way/there is a molecular difference) -patents must be upheld by the courts --> up to the patent holder to sue and the courts decides if violation has occurred (often court denies patent) -particularly an issue in software and genes, because there are only so many ways of doing things -patents can be bought and sold (or licensed) -patents are internationally recognized through treaty

discount rate

The interest rate on the loans that the Fed makes to banks -discounting: comparing money spent now to benefits in the future, further off in the future the benefits are the less prediction power you have -ex: how much money would I have to have now to have the equivalent 7 million in the future ex: discount rate of 5, trying to save life in the future would cost 1 million $ today, but 500 thousand in 15 years when you are trying to save the life -money now is worth more than money in the future --> saying we should be less willing to spend for the future, need to spend money for the present -discounting doesn't work for climate change!!!! have to invest now in order to solve the problem, climate change is potentially irreversible and catastrophic so discounting doesn't work

Curveball and Iraq invasion

US invaded Iraq because it was believed they had WMDs; turned out to be false -After UN pullout 1998, US intel community relied on imagery and signals intel -assumptions about Saddam's intentions -problematic intel related to dual-use technologies; assumed most tech was for military purposes -HUGE over-reliance on single human source (curveball) 1) Curveball was a defector, made everything up, did not work on any kind of weapons program and didn't even have the engineering background that he claimed he did 2) he ended up in a lot of reports that were all based on the single source, so it seemed as though info was coming from multiple places -HUGE example of selection bias on part of US, contradictory evidence from UN inspectors who were temporarily let back into Iraq and found there was no evidence of this, so US delegitimized their findings because it didn't support what they wanted to hear -public presentation of intel findings presented them as far more certain than they actually were -political pressure -risk of WMD was deemed to high to not act even with super limited evidence

Myriad vs. AMP

US patent law does not allow patents on natural phenomena, 1972 SCOTUS rules "isolated genes" can be patented as long as they are different from naturally occurring genes, roughly 2000 human genes have been patented Myriad Genetics via Bayh-Dole patents BRCA 1/2 genes making them the only people legally able to test for BRCA 1/2 mutations, genes which mutations are indicators for breast cancer. Association for Molecular Pathology (AMP) sues Myriad. Official ruling 2013: isolated genes are naturally occurring and cannot be patented, but cDNA can because not "occurring in nature"

costs/benefits of cancer screenings

USPSTF tried to update the best age to begin breast cancer screening; did not go over well with the public -when looking at costs/benefits need to see how screening affects morbidity and mortality, aka the benefits of early detection vs. the cost of false positives -false positives can do harm to someone who is healthy, ex: detecting cancers that won't develop into anything and getting unnecessary biopsy's, tests, and surgeries done -earlier age start screening the more lives saved, but at what cost -screening reduces mortality rate 15%, but overdiagnosis/overtreatment rate is 30% -if screen 2000 women for 10 years leads to 1 prevented death, 10 healthy patients treated unnecessarily, 200 subjected needlessely to additional invasive testing -comparing things that are not equivalent (1 death to unnecessary suffering of others); pretty much arbitrary and depends on the values of the people making policy and how you weigh one thing against another

precautionary principle

When a threat is of serious environmental damage, we should not wait for scientific proof before taking action -better safe than sorry; not risking it ex: asbestos; US adopted v. v. strict asbestos standards, despite little clear evidence that it caused a significant health hazard at LOW doses -didn't conduct CBA, almost guaranteed cost of removal far outweighed cost of keeping it -taking action makes people fee safer, keeps companies from being sued, political pressure esp because children were involved and unavoidably exposed (at school)

moral hazard

When the act of insuring an event increases the likelihood that the event will happen-class of principal agent problems where agent can exploit info asymmetries to their own advantage, but to principal's expense-no incentive to avoid risk b/c other party is on the hook for covering costs-all moral hazard problems are related to information asymmetries, either between insured and insurer or principal and agent-methods of preventing moral hazard: observation/surveillance, partial risk coverage-how far is to far in trying to prevent moral hazard? (worker surveillance)

Product Bundling

When two or more complementary items are packaged together -favors the seller, a la carte favors the buyer -bundling reduces transparency, forces you to buy things you dont want to get things you do -ex: hotel non bundeled is $200/night, charge $7/bottle of water, with bundeling hotel is $210/night and the water is free

Race to the bottom ("Delaware Effect")

a dynamic in which states compete to attract business by lowering taxes and regulations, often to workers' detriment -free trade and free capital flows lead to reduced regulatory standards -everyone will be forced to decrease standards in order to compete --> it has occurred nowhere near to the degree anti-globe advocates have pushed RTB most likely to occur: process, low asset specificity, low market power, not a large k group, high cost of regulatory adjustment -k group= critical mass of countries to agree that have enough of the market -ex: flags of convenience, international banking

Federal Trade Commission (FTC)

a federal agency empowered to prevent persons or corporations from using unfair methods of competition in commerce -stops monopolies from forming, antitrust regulation -investigatory and adjudicative functions -outlawed unfair methods of competition

patent trolls

a firm or individual that produces no products or services and owns patents only to obtain licensing fees from other firms -ppl who own patents they have no intention of using except in cases where other companies have infringed on their patent rights and the troll sues for patent infrignement -trolls jump in and claim licensing rights --> creates opportunities for extortions; often easier and cheaper to settle than to go to court ex: an individual had a patent for all communication via a wireless device, when blackberry came out he threatened to sue and offered to license the patent

Internet governance (IANN and W3C world wide web consortium)

a set of shared protocols, procedures, and technologies that evolve through common agreement among network providers -W3C: Worldwide web consortium, an international community where web standards are developed by a hired staff that works together with member organizations and the public -they call standards "Recommendations" ICANN: International Corporation Assigned Names and Numbers -serial numbers on computers -nonprofit organization responsible for coordinating the maintenance and procedures of several databases related to the namespaces and numerical spaces of the Internet, ensuring the network's stable and secure operation -IP addresses, can out of numbers until they changed the requirement to 32 digit code versus a 16 digit code Internet Governance is largely private, non governmental, -patchwork of standards and rules, often set and enforced informally -evolved in a way that favored US interests, open borderless, does not differentiate based on content -growing international disputes over rule setting -in some ways now more global, in other ways greater regional variations and border

consensual vs. adversarial approaches to truth

adversarial approach (poorly suited to science) -attacks on expertise, credibility (where funding from, history of researchers/experts) -tentative nature of science as a weakness (we have not fully answered all the questions for any given topic, always a chance a new study could come along and disprove what we think we know) -how certain are you? and if you are certain why continue to study it --> general public does not think about science in terms of general uncertainty consensual approach: using only information that is the belief of the collective judgment, position, and opinion of the community of scientists in a particular field of study; consensus implies general agreement -can be good or bad; science is not always consensus and those non-consensus rulings sometimes turn out to be right

Special Interest Group

an organization of people with some common interest who try to influence government decisions -often very large and powerful, such as the NRA or AAA -has a lot of influence, money, power, and expertise that it lobbies against the government to argue their political agenda -typically small well-organized interest groups have an advantage over large diffuse groups because less free riding in small, engaged groups -ex: AAA, majority of its members use it for roadside, rarely get involved with policy advocacy or even know AAA is an interest group

Anecdotal vs Statistical Evidence

anecdotal: specific cases are publicized and capitalized on; link (however tenable scientifically) is established between exposure and effect (ex: anecdotal evidence against silicon breast implants causing harm, enough that people got massive settlements out of it with very little scientific evidence) -silicon breast implants banned in 1993 statistical evidence: shows implants are safe(ish, nothing is 100% safe) and issues of safety cannot be resolved w/ 100% certainty -implants were on market 30 years, if there was a link to connective tissue disorder it would have been small otherwise seeing way more cases -no large epi studies conducted for safety; would have to compare rates of disease between implant group and appropriate control groups -expert witnesses did not have to present any evidence or explain the logic behind their reasoning, all they had to to was be willing to take the stand and give an opinion

US v. Microsoft

antitrust case where the US accused Microsoft of illegally maintaining its monopoly position (Sherman Act) in the PC market through legal and technical restrictions it put on manufacturers and individuals to uninstall Internet explorer and other software systems, removal of Windows caused slowdowns and malfunctions -Microsoft said windows and IE were the result of innovation and competition, that the two were the same product, and customers were getting Windows and IE for free -Opponents said no, IE was a separate product and could be upload to different servers such as MacBooks, and that IE was not really free because its development and marketing costs may have inflated the price of Windows -Microsoft won overall, but was forced to share its application programming interface with a third party. Microsoft was not forced to change any of its code or prevent Microsoft from tying other software with Windows in the future

Olson's Collective Action Problem

any group of individuals trying to provide a public good has difficulties doing so efficiently -ex: Free riders --> getting the benefit without the cosst -typically small well-organized interest groups have an advantage over large diffuse groups because less free riding in small, engaged groups -ex: AAA, majority of its members use it for roadside, rarely get involved with policy advocacy or even know AAA is an interest group -rarely do ppl change their position regardless of info, so you do it other ways, through personal incentives

types of performance indicators

behavioral indicators: focus on the actions a regulation or policy can control ex: car emissions, vaccinations administered, bans of substances in food --> meant to increase health outcomes but you are measuring if the substance is in the food and not the actual effects on health intervening indicators: measure variables that sit on the causal path between behavioral and ultimate objectives ex: atmospheric CO2 --> actually interested in mean temp rise, SLR, so conclusions are based on a predicted or assumed relationship between variables and objective (ex: CO2 is related to temp rise) consummator: focus on ultimate objectives ex: infant mortality, life expectency, GDP growth, quality of life -very broad, could have many things contributing to them ex: reduce level of terrorism in aviation, so increase security in airports ex: -behavioral indicator: % increase of TSA employees -intervening: # who got through and failed, # who got stopped before it could happen -consummator: there has been no terrorism since 9/11

Bureaucratic Interests

bureaucracies have their own interests, which differ from those of the society on whose behalf they are acting -typically have an interest in maintaining/increasing their budget and power (have a greater influence over a wider set of issues) -people have biases, human nature to think that what they do is more important and at justifying things in our own interest

consent and online privacy

cookies, third-party tracking, apps like the brightest flaslight free, Android flashlight app collected and sold geo-location data-Google and the EU: must have permission to use agreggated data, track consumers-"right to be forgotten"-pre-ticked opt boxes or "default consent"-implied consent vs. presumption of privacy-massive disclaimers, people don't know what they are agreeing to, can't use a website without consenting to them using your data

credence goods vs. experience goods

credence goods: type of good with qualities that cannot be observed by the consumer after purchase, making it difficult to assess its utility; difficult or impossible to evaluate even after consumption has occurred ex: medical procedures, car repairs, dietary supplements experience goods: product or service those that can be accurately evaluated only after the product has been purchased and experienced ex: theme park, haircut, holiday, restaurant

lemon markets

crowding out of high-quality goods in markets of low information-sellers have private info about quality = incentive to market poor quality merchandise-ex: used car markets, lower quality cars dominate market place and crod higher quality ones out, owner has lot of knowledge about car and history of accidents and repairs-buyers assume something is wrong and discounts price b/c unknown price element of fixing car-if seller has high quality car buyer still discounts price because of uncertainty, seller will likely sell in private channel-ex: buying online products, paying for services (plumbers, contractors)-no market is entirely a lemon market (use reviews, asking trusted individuals)

partial risk coverage

deductibles, co-pays, caps -methods of preventing moral hazard

internet effect on lemons problem

do ratings/review sites improve ability of consumers to distinguish high and low quality goods?-need info about what sites to use, how to interpret those reviews, reviews may just be ads-might make it easier to deceive consumers ex: all natural, heavy metals are all natural but I don't want them in my products-misleading claims: organic, all-natural doesn't imply the product was grown or manufactured in accordance with NOP

blockbuster drugs

drugs that are used so widely and frequently that while the patent life is still on the company that produced them gets a massive amount of revenue -ex: cymbalta (antidepressant), nexium (acid reflux, GI issues, ulcers)

Externality

economic exchange when some of the cost gets imposed on unconsenting 3rd parties who do not participate in the purchase or production of that good -can be pos or neg -ex: living near a factory that you do not work at or purchase goods from -ex (pos): herd immunity from immunizations

cost-benefit analysis

economic model that compares the marginal costs and marginal benefits of a decision; costs and benefits of regulation -in policy we want to do what is most cost effective ex: what will save the most lives with the same amount of money (ex: saving 7 lives or two lives and saving 7 was less money per life, choosing 7) -attempts to be as objective as possible, but is still relatively subjective due to personal risk tolerance and variation in VSL (valuation of a statistical life); accepted as objective in public policy debates -requires all quantification of costs and benefits in dollars, which is very hard to to

Coasian theorem

even in the absence of regulations you will still have actors negotiating w/ each other to produce the most efficient outcome, barring transactional costs ex: two farmers, Farmer A cows are getting onto Bs property causing crop damage, a fence will get put up one way or the other, question is who will pay for it; most efficient does NOT = most EQUITABLE Coasian theorem less likely to work if: -more than 1 person involved (free riders) -efficient solution may be to not do anything ex: if transaction or other costs are too high, extortion situation -info asymmetries -important because you don't need regulation for anything, but in a lot of cases

psychometric risk analysis

explains how individuals perceive hazards -subjective judgement that people make about the characteristics and severity of a risk -people view uncertain things with a much higher level of risk than they do certain things -people are bad at judging risks because of lack of prior experience with something, don't know how risky something is, generalized bias -the greater people perceived a benefit the greater the tolerance for a risk -risk perception highly dependent on intuition, experiential thinking, and emotions about: 1) degree to which a risk is understood 2) degree to which it evokes a feeling of dread 3) number of people exposed to the risk

Bayh-Dole Act and patenting federally funded research

federally funded research can be patented to become a commercial product , with qualifications that the gov't can march in -A law encouraging universities and researchers to develop their inventions into marketable products -before Bayh-Dole govt held patents, would license non-exclusively -federally funded research, esp at universities, generates billions in intellectual property (including drug discovery) -march in rights: if govt waives its right to patent and the university isnt doing anything with it the govt has the right to march in and bring the patent to a different company that will use it -march in rights have never been enacted before -NGOs tried to lobby to enact march in rights on Norvir, a drug that substantially boosted the effectiveness of HIV medication increasing the price by 400% only in the US, but the drug was developed using US federal funds

Patents

gov't granted exclusive right to a novel product or process for a set period of time (US typically 20 years) -criteria; new, useful, and non obvious -a form of "intellectual property" knowledge is a commodity and is patent able -its all about the right to exclude others from use, it is not about ideas (has to be an established product or process) -patents gives companies a monopoly -creates incentive to innovate/create something -reduces application of that idea to others -why patents?: social benefits of innovation typically far outweigh private gain by investors and R+D -patents are public knowledge: innovations can be freely exploited in research but not for commercial/financial gain

March in rights (Norvir)

if a university or company is sitting on a patent given by the federal gov't developed using federal funds, the gov't has the right to march in and bring the patent to a different company that will use it -march in rights have never been enacted before -NGOs tried to lobby to enact march in rights on Norvir, a drug that substantially boosted the effectiveness of HIV medication increasing the price by 400% only in the US, but the drug was developed using US federal funds -tried to enact march in rights to force Abbott to provide licensing to companies making similar products NIH sides with Abbott --> argues it was available in the market and able to be purchased, couldn't make an argument that it was being exploited and pricing of drugs isnt written into the law -aka only Congress has the right to step in and control the price of drugs

Regulatory Capture/Stiglerian Regulation

industries that are pushing regulation that benefits that industry rather than society at large; regulated industries seeking regulation for privet gain (aka rent seeking) -when a regulatory agency fails to act in the public interest, and instead the commercial or political concerns of special interest groups that dominate the industry it is charged with regulating -leads to a net loss for society -a captured regulatory agency is often worse than no regulation, because it wields the authority of gov't -increased agency transparency may help with concerns -ex: Bureau of Ocean Energy Management; Senator Salazar became the head of BOEM despite strong ties to the energy industry and continual backing of tax breaks for petroleum companies and voted to end protections against offshore drilling -can go from bribing officials to cultural capture

imperfect consent

informed consent: voluntary acceptance of risk in light of adequate information-information basing decision on may not be adequate --> unknown element of research-can children, people with cognitive impairments, addicts make informed choice about risk? who can act on their behalf-long history of abuse in these at risk populations in the name of research

biologics and biosimilars

insulin case; biologics: biological products that are taken from living organisms then sold --> need more significant testing than normal generic drugs cause you dont know the process biosimilars: generic biologics Insulin discovered in 1920s at University of Toronto, patent sold to Eli Lilly, who produces low cost insulin for diabetes by purifying it from pig and cow pancreas but it was inferior to human insulin. Insulin is very expensive and price keeps going up, patentable because insulin that has been isolated and purfiied is not naturally occuring, so the patent is really a patent on the method of producing it -biologic= medicinal protein produced via recombinant DNA technology Genetech discovers method of inserting plasmid carrying insulin gene into bacteria, receives a patents for this method (licenses to Eli Lilly). Price of insulin rises dramatically (as does quality because it is now human insulin). Later develops method of producing insulin in years (Humulin) Generics are very hard to make because they need to be biosimilar, or v. v. similar in order to get approved by FDA, but it is very hard to work out how insulin is produced; no biosimilars have entered patent market

International Organization for Standardization (ISO)

international standard setting organization composed of representatives from various national standards organization -promotes worldwide proprietary, industrial and commercial standards -it is an independent NGO -world's largest developer of voluntary international standards and facilitates world trade by providing common standards between nations -standards are to create products and services that are safe, reliable and of good quality and decreasing transactional costs

Bomber Gap and Missile Gap

it was made to seem that the USSR had more bombs and missiles so the US used this as an excuse to create even more, they later found out that this gap was nonexistent -US enormously overestimated Soviet long-range bomber production in 1950s -cycling planes through to look like they had more planes than they did; estimates were 15 to 20x number they actually had -took pics of the only production site but it was assumed that they had more -reliance on US contractors to estimate production times (bias, looking at other countries resources and applying US mindset of what WE could do, instead of what THEY can do) -overall DoD and SAC have incentives to inflate threats

techno-institutional complex

lock-in occurs through combined interactions among technological systems and governing institutions -technocracy, once you put regulations in, ex: self driving cars, and create bureaucracies in charge of that and allocate budgets, industries develop according to those regulations, everyone has a vested interest in those technologies which locks it in -tying health insurance to employment was not supposed to be a long term way of doing things, but doing this created whole system with actors heavily invested in it, path dependence for interest groups in and out of the government Analogous to military complex ex: carbon lock-in; governance supported the technological innovation in fossil fuel industries and lock in occurs around those industries, and now state of fossil fuel technology is developed to the point that attempting to switch to renewable one is a huge governance issue because the system is designed around the fossil fuel industry

Length of patent life and optimal patent length

longer life of the patent increases inventors appropriability at cost of a longer period of monopoly pricing -longer patent life increases incentive to innovate (and potentially become patent trolls) shorter life of patent = efficient prices sooner, but may result in under innovation because companies are less likely to see profits/profits won't be as high -type of market matters in patent life; competitive market + patents are more important because they give companies a monopoly, if you are already a monopoly patenting because less incentivizing because you will just be replacing yourself assumptions about patent life: competition among inventors for the patent, invention is cost reducing strike a balance between short and long patent life, US thinks 20 years is that balance

lemon market in health insurance

low information market which incentizes low quality goods to crowd out higher quality ones-Shavell: not just expensive to insure the old and sick, but pimpossible through normal market mechanisms-if insureres raise permiums to account for greater likelihood of illness, only the sickest will buy-cannot have universal health coverage through private insurers without a mandate-healthcare's "lemons": preventable bad outcomes, opaque pricing, over or under treatment in US healthcare-equalizing information exchange improves outcomes + reduces unnecessary healthcare-a sick indiviudals superior knowledge of their medical needs gives them an info advantage in purchasing health insurance --> response: private health insurers screen customers to eliminate high medical users, coverage limits, increasing premiums-this increase cost for healthy users, who may leave the market

US Bio Engagement Programs

national strategy for countering biological threats-spreading culture of responsibility, spreading best practices-educating people worldwide about what is and is not dangerous, establishing oversight boards that approve any experiments being done/additional precautions-ex: basic safety practices, dangerous pathogens don't leave facilities, how to design facilities

Network Effects and two sided network effects

network effect: value of joining a network goes up as others join network -if competing networks, zero-sum competition to become dominant, tipping point at which one network wins (not necessarily the "best" or most efficient) -ex: facebook, instagram, value increases as #users increase Two-sided network effects: create platforms linking products and users, they provide infrastructure and rules that facilitate the two groups transactions ex: credit cards and merchants, adobe pdfs and readers, largely dependent on the number of users on both sides -generally you subsidize the neetwork's more price sensitive side, and to charge the side that increases its demand more strongly in response to the other sides growth (ex: document makers get charged, readers dont)

epistemic communities

networks of experts who bring their knowledge and expertise to the political arena to help policymakers understand problems, generate possible solutions, and evaluate policy success or failure -particularly in non-politicized areas and outside of the publics attention -experts tend to be apart of a global community because the community is small and closely nit; they all know each other ex: internet security, w/ internet providers there is a high need of standardization internationally, typically needs a high level of expertise ex: regulating nuclear industry

Regulation as Non-Tariff Trade Barrier

not allowing certain goods to be purchased abroad, or having strict rules or a high cost of doing so ex: purchasing pharmaceutical products abroad --> not allowed, disguised as a safety issue ex: fishing nets that trap dolphins ex: EU naming rule, if its not produced in that country it cant be called something

Nuclear Supplies Group

number of countries who sell nuclear technology, agreed upon list of things that they wont sell-ex: centrifuges to enrich uranicum are banned from sale-US argues nobody should have the full fuel cycle (ex: not processing plutonium)-collective action issues, imposing costs on others (cant buy, cant sell), only as strong as your weakest link (if a country decides to sell it could be game over)

pharmaceutical R+D

often a crapshoot requiring a large amount of money -1 in 4 drugs get patents, 3 out of 10 drugs are actually profitable -excuse for why drugs are so expensive is to recupe R+D costs, including the many R+D failures -lengthy drug development process, on average 12 years -FDA mandated testing cost is over $1 billion -patents are only based on "molecular entity", process, indication -Angell argues against this because of the small R+D budgets in comparison to the rest of big pharmas budget, more money is spent on advertising than it is on R+D -drug companies are not especially innovative, and most drugs are new versions of older drugs -drugs are priced significantly higher here than in other markets

Institutional Review Boards (IRBs)

organizations that evaluate research proposals to make sure research involving humans does not cause undue harm or distress-reviews all biomedical and behavioral research involving humans Criteria: -knowledge of study ad its purpose -full disclosure of risks AND benefits -subjects voluntary consent-subjects decisional capacity -equal treatment of subjects Comes after a long history of abuse for at risk populations, Tuskegee, Nuremberg, radiation experiments

patent breadth and patent claims

patent breadth: in the patent application it must specify claims --> exactly what aspects of the invention the patent protection will apply to -if you don't ambiguity, lots of pointless court cases -keeps patents from being too broad

nuclear fuel cycle and nonproliferation

processes involved with producing nuclear power from the mining and processing of uranium to control fission, reprocessing of spent nuclear fuel, decommissioning of power plants, and disposal of radioactive waste-nonproliferation: preventing the increase in amount of countries that possess nuclear weapons (NPT)

Rent Seeking

regulated industries seeking regulation for private gain; seeking to increase one's share of existing wealth without crating new wealth -ex: using regulation to impose barriers of entry or taxation loses for competitors or economies of scale -results in reduced economic efficiency through misallocation of resources, reduced wealth creation, loss of gov't revenue, and heightened income inequality

dead hand effect

regulations in place that for whatever reason become irrelevant and outdated, new science shows them to be flawed, cant get the votes together to change anything about it

predatory pricing

selling a product below cost to drive competitors out of the market -undersell any new company trying to enter the market cant keep up -monopolistic practice

Tragedy of the Commons

situation in which people acting individually and in their own interest use up commonly available but limited resources, creating disaster for the entire community -individual +1, everyone -fraction of 1

technology based regulation vs CBA

technology based regulation: without looking at CBA given the current state of technology what is the best practice, and then mandate that for everyone regardless of cost -avoids problems from a CBA, CBA dependent on assumptions that inform it (ex: VSL); known to be off by orders of magnitude ex: with the Clean Air Act the EPA goes on technological standards and are bared from doing a CBA

Product labeling and certification

some gov't rules but not many-ex: prevention of cancer, if there is ANY credible study that shows any statistically significant reduction in cancer you can market it as such (could be v. small difference, small sample sizes, which studies end up getting published and reported in the media)-to what degree should gov't regulate? vitamins, supplements, and ads make dubious claims all the time-arguments is info will get out there anyway, doesn't matter what gov't does because if they step in they can fuel conspiracy theories-how high do you set the burden of proof? if require companies to provide more info, what percentage of people are going to use it effectivelylots of certification, USDA organic, human, energystar, B corporation-not all certification s are legitimate, private companies can be certifiers and don't necessarily mean proofex: all natural, heavy metals are all natural but I don't want them in my products-misleading claims: organic, all-natural doesn't imply the product was grown or manufactured in accordance with NOP

Pigouvian Taxation

tax on any market that generates externalities -to correct market failure -set equal to the social cost of the negative externalities -revenues of tax can go to 3rd parties ex: increasing price in gas gives auto industry and incentive to increase fuel efficiency (externality: pollution for increased fossil use, high cost to consumers will make consumers more likely to purchase more fuel efficient vehicles)

Jevon's Paradox

technological progress can increase the efficiency of resource use, which can increase the rate of consumption of that resource -ex: fuel efficiency, CAFE standards -automakers over time produce cars with higher fuel efficiency, which provides incentive for people to drive more -important because new behavior undermines the gains change was meant to eliminate -short term tax+standard setting (CAFE standards) reduce fuel consumption, but long term standards = stop innovating once level is met, tax=continuous innovation to reduce costs -increased driving offset higher fuel efficiency until mid-2000s when driving started to decline

path dependence

the notion that earlier events or decisions deeply affect current and future policy decisions or outcomes -hard to go back and rewrite things, when technologies are new still have to write regulation for it but don't necessarily have all the information or science behind it, drone regulation, DNA genetic regulation, we don't know how these technologies will progress in 30 years from now

Porter Hypothesis

the theory that environmental regulations motivate firms to identify cost-saving innovations that otherwise would not have been implemented -social costs of regulation tend to be offset by technological innovation -meeting new standards at lower cost than anticipated ex: clean air act 1963, massively spurred tech innovation making regulation standards MUCH less costly than feared

Free Riders

those who enjoy the benefits of collective goods but did not participate in acquiring them -occurs in interests groups seeking public goods -still get the benefit without the time/resource cost of actually doing something -often individual actions aren't going to change outcomes so many people feel it is not worth participating

Type 1 error (false positive) type 2 error (false negative)

true positive: drug test, have drugs in system and test shows I do true negative: no drugs in system and test says no drugs False Positive (Type I error): do not have drugs in system but tests says I do False negative (Type II error): have drugs in system but test says I don't Any test for something that is rare (even with high sensitive and specificity) will get many more false positives than true positives sensitivity: rate of true positives specificity: rate of true negatives

quality disclosure

using rating systems, certification, licensing warranties, reviews to try to establish quality of a product before purchase-important, reduces info asymmetries, should there be regulations? gov't or private quality disclosure systems?-private: certification system, do certain jobs like dog groomers really need to be certified by the state? mainly a barrier to entry-gov't: medicine, certification system for doctors is necessary for high quality healthcare-mandated vs. voluntary-branding, name recognition = known quality-industries require disclosures (ex: hospitals and schools, can be very misleading)-ratings can be very misleading, regional confounding factors like age, SES, riskier behaviors problems with quality disclosure: shopping for cerifiers (RTB), improper.misleading metrics, consumer ignorance, conflicts of interest/regulatory capture, perverse incentives

Market Based vs. Command and Control Regulation

ways gov't address market failure Market Based Regulation: Change Incentive Structure ex: -Pigouvian taxation (tax on anything that generates externalities, equal to the social cost of negative externalities -Cap + Trade/Flexible Regulation -Subsidies --> incentivizes companies to do things -Assumption of risk (Insurance) ex: FDIC Command and Control: Forcing companies to adhere to standards; you must do this or face this consequence -ex: seatbelt safety standards, airport regulations for noise pollution

Stovepiping

ways raw intelligence info can be presented to hierarchy without proper context -possible for agency, group, or individual to selectively present only info that supports certain conclusions, and that bad data gets sent directly to higher-ups

Value of Statistical Life (VSL)

willingness to pay to avoid a risk that would result in one more death in the population value can be based on: -survey data (stated preference --> how much would you spend on this, how much would I have to pay you to assume this risk) -wage data for hazardous jobs (how much extra am I being paid to assume some risk and extrapolate out) -price data for risk reduction (revealed preferences, how much are people willing to pay to reduce risk, make things safer) ISSUES -additonal $ for accepting risk could be over or under valued -big diff between risk of death and death -people many not know the risk they are in/how to value it -VSL doesn't account for sickness, illness, quality of life, productivity losses --> only focuses on death; something could cause quality of life to improve greatly but not really change amount of lives actually saved and it would be thrown out