Home > Economics - General > Second-mover advantage

Second-mover advantage

April 23rd, 2004

It’s the fate of market innovators to be undercut by new entrants. Bill Tozier has hit on the idea of auctioning co-authorship rights, including the acquisition of an Erdös number of 5. As of this posting, the Ebay high bid stands at $US 31. 354

But Bill has apparently failed to learn the lessons of the dotcom era. The first is to patent everything. As far as I can tell, Bill has failed to file for a business methods patent on his idea, leaving it open to new entrants to imitate him, or even to patent the idea themselves.

The second is that the best way to undercut the competition is to give your product away. Following on this lesson, I’ve decided to set my co-authorship price (including *free* Erdös number of 4) at zero. That’s right, potential co-authors! Send your paper to me with a space for my name on the front page, after yours[1]. SEND NO MONEY! If I like it, I’ll insert my official stamp, and send it off to an appropriate journal. I don’t know why I didn’t think of this earlier!

Just to be boringly clear, my offer is a joke. Bill asserts that his offer (which actually involves doing his share of the work) is serious, and I have no reason to disbelieve him.

fn1. Yes, that’s right! You get to be senior author, on no stronger basis than that you do all the work. How many big-science labs would offer a deal that good?

Categories: Economics - General Tags:
  1. Harry Clarke
    April 23rd, 2004 at 10:02 | #1

    Why do you qualify your offer by making it clear it is a joke? Presumably because selling off authorship rights is costly to you. It destroys the value of your own CV and does the same to any serious author who enters the same arrangement. To the extent that your CV is a valuable personal asset you should charge a large price to compensate for the value of such destruction.

    Your joke offer of free coauthorship is different from the dotcome idea of giving things away for free for other reasons as well. The dotcom moves were to create minimimum market size to generate enough network externalities to ensure viability. This sometimes worked but more frequently was a gamble that didn’t. You won’t be building any markets with your free offer only destroying personal asset values.

  2. April 23rd, 2004 at 10:35 | #2

    Harry is perhaps the most best reader of the situation Ive yet come across. I take very little damage from the sale, and my tacit goal of undermining the reasons John is threatened with damage are best served by charging an exorbitant fee. And the community thing… well.

    I’m impressed and pleased.

  3. John Quiggin
    April 23rd, 2004 at 10:38 | #3

    Actually, Harry, I’ve never been one to worry about diluting my CV. As you can see it includes some thoroughly pedestrian stuff, along with papers that have made a reasonable impact. I’ve often been told that if I were to go for a job in the US, I’d have to delete large slabs of the CV so as not to detract from the good stuff.

    The reason it’s a joke is the point in footnote 1. In my view, you should be a co-author if and only if you’ve done a substantial share of the work. This is not the case in all areas of the academic world, more’s the pity.

  4. April 23rd, 2004 at 12:05 | #4

    JQ, I have even heard rumours that sometimes graduate students do all the material work and their supervisors do the cosigning. I wouldn’t really know anything about that, of course.

  5. April 23rd, 2004 at 14:52 | #5

    a friend of mine slept in erdös’ bed until he kicked her out?

    that should earn you a number 0.5

  6. PK
    April 23rd, 2004 at 17:30 | #6

    For a social democrat, your entrepreneurial instincts are surprisingly sharp!

  7. Harry Clarke
    April 24th, 2004 at 15:04 | #7

    On reflection, selling coathorship rights should be a ‘no production’ or ‘no trade’ good at least in an informed world. Buyers of co-authorship rights will pay little for such rights if others know that they were purchased (and therefore signalled zilch about the abilities of the purchaser) while vendors would demand a high price for the destruction of their personal CV asset value. Thus trade would just not occur with good information.

    One might get out of this by (i) supposing the market is not informed — people do indeed buy bottled water and they will pay for an Erdos Number! or (ii) by supposing that people get a kick out of engaging in a frivolous/humorous trade e.g. those who buy Doctor of Divinity degrees from the University of The Beverley Hills and hang them on den or office walls.

    But each of these explanations will wear thin with time and the resulting markets will disappear. Moreover, Adam Smith is vindicated: the disappearance of such markets helps drive an efficient and equitable reputation optimum.

  8. April 25th, 2004 at 23:45 | #8

    Hmmm. So might it be that a change in social signals sent by buyer and seller — say, a change in the social context and relevance of the sale act — might manage to offset an inevitably dwindling humor market by, say, a public works market?

    It would, of course, depend on whether product marketing has a “latency period” — whether the previous joke overwhelms a serious revision.

    Let’s see what happens.

    Somewhat before I had originally planned it, I’ve made a minor amendment to the auction sale. Results will be reported on the blog, as time permits.

Comments are closed.