The idealized free market can be framed in a number of ways, but the Coase Theorem is one of its more intuitive pillars. The idea is that, *under certain well-specified conditions*, property lands in the hands of those who value it most, regardless of who gets that property at the beginning. Now you need to specify those conditions. One is that it's costless for sellers to find buyers, and costless for them to carry out the sale. Under these conditions, I sell my property to person A, who sells it to person B, and so on until it finds the person who values it the most. (The mathematicians would say that this is an "if" rather than an "only if": there may be other conditions under which property finds the right home, but at least we know that it does so under the given conditions.)

The trouble is that in the real world, transaction costs are nontrivial. To sell a piece of property, you need to engage the services of a lawyer to draw up the contract and need to pay various fees to various government agencies to maintain the records of who owns what. This isn't just "bureaucratic friction"; it's essential to the system's functioning.

So the Coase Theorem doesn't apply in the real world. To his credit, Coase understood this; his work is where much of the economic study of institutions starts. Humans establish institutions, goes the story, when their own uncoordinated actions would lead to manifest market failures. In a world with positive transaction costs, institutions spring up to bring us somewhat closer to the world predicted by the Coase Theorem. "The Gridlock Economy" is, in part, an exploration of these institutions. And it's a fun read.

There are cases in which Coase breaks down rather viciously; these are the cases that Professor Heller tackles in "The Gridlock Economy". Not all private property is created equal. Sometimes land is unavoidably split and cannot be put back together without political changes -- as, for instance, with the Rumaila oil field shared by Iraq and Kuwait. In these cases a prisoner's dilemma can develop: without coordination, and enforceable penalties for violation, both Iraq and Kuwait will extract as much oil as they can, as quickly as possible, from the ground beneath them. If they don't, they know that the other guy will.

This story of competing for a resource when property rights are split, leads to the longest and most fascinating story in "The Gridlock Economy", about the fight between Virginia and Maryland over oyster-harvesting rights. The fight lasted 300 years, led to untold deaths, and was a real-world example of how property rights matter.

The general theme is that often property rights are divided in such a way that they prevent optimal use of a resource. Too many people with divergent interests need to be coordinated before the whole mass of them can move. Heller's clearest and most entertaining example in this direction (what Daniel Dennett would call an "intuition pump") is the Quaker Oats Klondike Big Inch, whereby those who bought Quaker products 40-some years ago each got a deed on a single square inch of Alaskan land. It was all very clever at the time, but what happens to that land when someone wants to develop on it years later? Any potential developer needs to track down every last "big inch" owner and buy up his land. Quaker didn't, of course, register all of those who owned big inches, so the costs even of finding those owners are prohibitive, not to mention contracting with them.

Imagine, instead, that those big inch owners were regularly in contact with one another (they've all established a Big Inch Alumni Club, say). Word starts getting around that a developer is buying up their inches. Pretty soon owners stop selling, or they jack up the prices at which they'll sell. The developers must, of course, realize that this will happen before they even start buying. So smart developers will either buy up the land slowly -- as big-inch owners die, say -- or they'll establish many front companies to convince owners that the buying effort is uncoordinated. This obviously imposes huge transaction costs. These transaction costs are as high as they are because each big-inch owner has something akin to monopoly power: one owner out of a million can block the entire transaction. It's private property like any other, but it's private property done wrong.

Cities normally use eminent domain to get around this monopoly problem: forcibly buy land at fair market value, then hand it over to a private developer. But eminent domain is pretty ugly, and isn't voter-friendly. (As it happens, eminent domain is exactly how Alaska got around the big-inch problem with this bit of land.)

The endorsement on the cover from Larry Lessig suggests to potential buyers that we'll be encountering gridlock in the copyright and patent domains, and indeed we do. As Lessig and many others have pointed out, the new "mashup economy" can't work if every mashup artist needs to contact the source of every song he's sampling. Songs go unproduced. Here's where Heller asks us to add a word to our vocabulary: rather than just thinking about "overuse," which the tragedy of the commons forces us to consider, Heller's tragedy of the anticommons makes us think about underuse -- for instance, underuse of music samples that could otherwise be put to profitable use, or big inches laying fallow in Alaska.

For a sub-200-page book, "The Gridlock Economy" is highly enlightening. I know of few other books which capture patent, copyright, real-estate law and transaction costs under a single simple, readable framework. In a just world, Heller's book will change the way we think about markets and property. By the time it's finished, Heller sees gridlock everywhere, and so do we.

This is a fascinating book. Michael Heller says he got the key insight to the problem he describes in this book in the faulty way the old Soviet Union tried to create private property upon its dissolution. For example, let's say you have been operating a store and with the return of private property, you might expect that you would either get the store or be able to buy it from the state or some such process that would let you continue operating the store. However, you forget that all those Soviet bureaucrats have to get property too! So, some people formerly with the government would also be assigned rights of ownership to the property and your store. This means all of you need to share in its profits and must agree on how it is to be operated. Unfortunately, this also empowers the owners who have no real interest in working the store. They will demand to be bought out in order to let the store function. So, the store cannot function and will be closed with the building sitting vacant. Was society improved by this process?

We all know about the problem of commons. Say there was a well producing apple orchard that we turn into a park that no one owns and everyone can use as they see fit. Will the apple trees be tended to? Will the apples be disturbed to those who need it? Or will the trees be untended, the apples taken by those who want to hoard or sell them, or might the trees be cut down for their wood? All we know is that the orchard will be destroyed. Private property, rightly assigned, can protect resources by those who have an interest in their continuing. When ownership becomes too granular, what Heller calls anticommons, it freezes assets and keeps them unused just as surely as the commons problem does. If that apple orchard were owned equally by 1,000 people who each had a portion of each tree, gridlock would set in because nothing could be decided and nothing would be done to care for, harvest, or use the tree productively.

The author uses many real life business stories to illustrate his points. I found his arguments interesting and very much worth thinking about. His central examples focus on the way our current patent laws for medicines and pharmaceutical manufacturing prevent the creation of new and beneficial medicines. He also shows why our radio spectrum is mostly empty because of the crazy way we license it. The United States is far behind in the products and services available in our telephones, TVs, radios, and other uses of this precious resource. Leaving it unused is just as silly as overuse. We also get a tour of how less than optimal private solutions are created when government creates either a commons or an anticommons problem. Heller then takes us to Moscow and shows us the mess there and offers some steps we can take to fix problems in our own economy.

Good reading.

Reviewed by Craig Matteson, Ann Arbor, MI

An excellent book. The chapter on Russia's efforts to adopt property rights in the retail and apartment markets alone is worth the price.

Heller's main thesis is that too much ownership can work to 'gridlock' economic progress, investment and innovation. This is explored in how granting too large a bundle of rights for patents has hobbled many high-technology, biotechnology and pharmaceutical development efforts, threatening U.S. prosperity and consumer well-being.

Also, a fine chapter on how U.S. radio spectrum, subject for decades to FCC over-specification of permissible uses and politically-constrained allocation practices, is presently a mostly-wasted public resource.

I enjoyed reading this book. A lot. I've worked in the high-tech business and can vouch for many of the things presented throughout the pages. I did find that the book repeated many points, seemingly unnecessarily, and I do wish that more time would have been spent on ideas for how to solve the problems that exist.

Every once in a while a gifted academic writes a book about a technical subject that changes the way the lay public sees the world. Michael Heller has written such a book. The Gridlock Economy illuminates by giving language to a phenomena that is all around us but we've had no word for. The stories he tells are chilling and heart wrenching. But he gives us hope as well. By describing gridlock and why it happens - the word he coins is "anticommons" - Professor Heller lead the way to creative problem solving. This book is a must read for policy makers in all fields.

Michael Heller's Gridlock Economy is this year's must-read popular economics book. As reviewers at Slate, Time, and elsewhere have noted, Heller's book compares well to 2005's mega-hit Freakonomics, as well as Malcolm Gladwell's Blink, James Surowiecki's (of The New Yorker) The Wisdom of Crowds, and Chris Anderson's The Long Tail.

Gridlock Economy shares two important characteristics with those books: a compelling central organizing idea and great writing. The central organizing idea is that "too much ownership" can stifle economic innovation. By "too much ownership," Heller is referring to the kind of situation that arises with increasing frequency across all the key sectors of the new economy including biotechnology, software, computer hardware, music, movies, and finance. Our efforts to promote innovation by granting patents and copyrights (and other government-sponsored forms of intellectual property protection) can often come back to bite us.

Heller provides dozens of interesting examples across the entire range of the new economy. His lead example involves the difficulties that a researcher at a big drug company is having pursuing a promising cure for Alzheimers. To make headway, the researcher needs to purchase or license a host of patents held by a not small number of competitors. Our current patent system gives --for better and, in this case, for worse-- gives each patent holder involved the capacity to hold up this important research. If we're lucky an entrepreneurial "patent bundler" will come along and piece together the necessary patents and licenses. Meanwhile, we're stuck in Heller's gridlock.

I teach university courses on Copyright and Intellectual Property. In the past, I've assigned Heller's Science article explaining how the "anticommons" has prevented new and important pharmaceuticals from being developed. However, this book offers an infinitely more readable, entertaining, and nuanced argument. I will certainly be adding it to my syllabus this Fall, and recommend it to anyone who enjoys reading the works of Lessig, Gladwell, and the like.

I'll give you an example of a gridlocked economy. How about eliteist university presses who think their e-books are worth double the price of most others. Ironic to say the least.

This book arrives at a very auspicious moment. The key concept is that property ownership is not an unmitigated good, and, worse yet, it can lead to economic gridlock and underutilization of resources. In a rising economy, with property values going upward, this book would probably not sell too many copies; but in a declining market, with many homeowners stuck with adjustable mortgages greater than the value of their homes, the downside of property ownership is now more manifest.

Michael Heller teaches real estate law at Columbia University Law School and he is considered one of the foremost authorities on property law. In the current work, he discusses what he calls the tragedy of the anticommuns. The expression "tragedy of the commons" goes back as far as Aristotle, referring to the absence of individual property rights. Heller's "tragedy of the anticommons" refers to uncontrolled proliferation of individual rights, all clamoring for their own stake with total disregard for the common good. He correctly claims that too many property rights can strangle the market. This is an unpopular and inconvenient idea that runs counter to one of the most fundamental beliefs of capitalism.

Heller argues that property rights create gatekeepers. A gatekeeper is someone whose permission we need to get something done. Modern society is complex, and with more and more gatekeepers, the chances of getting things done becomes more difficult all the time. This sounds like commonsense, and economists have traditionally called this the burden of transaction costs. Heller's take on this issue is new and refreshing in that he creates a new vocabulary in describing it.

One of the examples Heller uses to illustrate his thesis is the gridlock that is taking place in the pharmaceutical industry. Many important drugs remain off the market because there are too many owners of patents all claiming rights to future profits.

Another example is the current mortgage crisis. In the old days when banks made loans and kept them on their books until they were paid off, ownership was clear and simple. Now, after loans have been repackaged and sold to investors many times over, ownership is multiple and no longer clear, making it virtually impossible to restructure them.

Although possibly trendy and definitely contrarian, this book does not give any solutions to the problem, other than understanding them better. Property rights are the cornerstone of capitalism as economists and philosophers since Adam Smith have argued, and as Heller himself argues. However, sometimes respecting everyone's rights strangles the economy and something needs to be done for the common good. This book is an interesting discussion of this dilemma.

There are an awfully lot of good books on the economics of private ownership out there. What makes this one special is it really takes apart what has become the most underreported and underestimated side of inefficiency, and that is property being broken into units so small, they aren't of use anymore. This is important, for example, because it has hindered medical innovation, by forcing people to wait out a nearly endless stream of patents before developing a new drug to combat, say, alzheimer's.

Another big positive of the book is it's nice to give credit where credit is due, and Heller invented the study of this stuff. It's great to hear it right from the horse's mouth.

And, what is definitely most important, it is accessible to any audience. If you are just leaving high school and want to know a good collection of injustices created by capitalism run amok, you would want this book.

If you are a free-market economist (or a college econ student) and want to have a thorough understanding of this form of inefficiency, you would want this book.

But I think this book is best for people that look around and feel like the country has so much potential, so much brainpower, and technological ingenuity, and yet for some reason our economy is on life support. There are a lot of books that point fingers at the failures of officials, and businesses, and individuals, etc. This one not only defines problems but points to solutions, something you almost NEVER come across in popular reading today. A great read all around.

I picked up the book yesterday and could not put it down. I was captivated by how well written this book is for a layman with a generic knowledge background in business. I especially enjoyed the organization in snippets that I could read. I kept saying okay, I'll read two more and I'd find myself having read seven more at that first sitting. I finished it this morning but will re-read it more carefully for a later review but for now it is a mid-5 star review.

In law school, there are professors you love and professors you hate. The ones you love are magical... they take the seemingly quotidian and open up new worlds. This book does just that in an incredibly accessible fashion. It's a great read and one that will keep me pondering the anti-commons for some time.

Gridlock Economy presents a single big idea which will change the way you understand the world.

The book builds on over a decade of research by Professor Michael Heller who pioneered the idea of the "tragedy of the anticommons".

Gridlock Economy reviews the negative social impact of having too many competing owners. Simple as that may sound, the book is transformative. Its beauty and power lies in its presentation of a single focused argument that helps explain thousands of issues, from overcrowded airports to poor cell phone service to the disenfranchisement of generations of African-American farmers.

After reading this book, you will see the risks and costs of a "gridlock economy" everywhere.

The book can broaden one's basic understanding of the world while also providing intellectual tools for investors and others seeking to make sense of a rapidly changing world.

And, Heller's book is entertaining and written in a crisp, thought-provoking manner.

Gridlock Economy presents serious policy research with a fascination and curiosity for explaining some of the mysteries of our complex world.

If you enjoyed Freakonomics or the Tipping Point, you'll love this book.

This book not only challenges the reader to see the world differently, it is also very funny, absorbing, and full of surprising details. Who knew that only one airport has been built since 1975 even though air traffic has tripled? I didn't. Nor did I know what BANANA means in real estate lingo, nor that on any given work day there are lines of briefcases standing like toy soldiers outside the New York Buildings Department office. Michael Heller draws back the curtain to reveal a world most of us don't see, and takes us through it with wit and energy. He'll remind you of that great professor you had in college--the one who conveyed complex ideas through simple and engaging anecdotes, and made you feel wise beyond your years.

This book is a great introduction to a very interesting topic, written in a way that is easily accessible and understandable both for those in the legal field and those without any legal background at all. Heller skillfully takes readers on a journey through the many areas of life, both historical and contemporary, that are or have been affected by this concept of the anti-commons. Just a few examples include Heller's discussions about robber barons blocking travel through water channels by collecting tolls every few miles, to the difficulties of obtaining rights to music from numerous different owners to create rap songs with mixed samples, to the inhibitory effects on the development of medical treatments because of too many owners owning tiny bits of gene sequences. It is an eye-opening book, and one that everyone should read.

This book is getting enough traction, but strikes me as very out of touch with a broad range of libertarian, collective intelligence, and citizen home rule, to the point that I expect my own review will be negative.

Let's start with corporate personality. The limited liability of corporate officials who have looted one fifth of the financial value, funded two dysfunctional parties, and the limited accountability of public officials who have sold public land and public spectrum to corporations below market value, while refusing to invest in local education and welfare, are all part of a massive decline of the Republic.

Of course too much private ownership is bad for the economy. Duh.

Here are a few books that I recommend alongside this one:
The Battle for the Soul of Capitalism
Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It
No Logo: No Space, No Choice, No Jobs
Confessions of an Economic Hit Man
Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil
The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic (The American Empire Project)
The Case Against Wal-Mart
War is a Racket: The Antiwar Classic by America's Most Decorated Soldier

Here are a couple of DVDs
The Corporation
Why We Fight

I read a lot, so my angst and my presumed annoyance with this book and its putative naivete about how we can free innovation may be more aggressive than many might think the author deserves. Who does he think sold off bandwith rather than supporting open spectrum, and how much were they bribed to betray the public interest?

I won't mention the books I have written, edited, or published, but I will say that I stand in shock and outrage as America (the portion that reads--NASCAR folks do not, see my review of Hunting with Jesus) is tillated by this "cool idea." Cool? It was cool in the 1970's when Limits to Growth, Global Reach, Silent Spring, and all the other classics came out. The problem is that We the People allowed money to talk while abdicating our role as armed and informed, to keep government honest.

I'll go with Lawrence Lessig on eliminating corruption, Yochai Benkler on the wealth of networks, Mark Tovey on collective intelligence, Jim Rough on Society's Breakthrough, and on and on and on (true cost, natural capitalism, triple bottom line, buy-cott).

A full review by next week-end. For now, based on multiple reviews and what the publists have shared, this book merely annoys.

Home rule. Eat local. Take back our open spectrum (see comment for my "Open Everything" keytone to Gnomedex 2008. I am scheduled to appear at the last meeting of Hackers on Planet Earth 18-20 July, in New York City.

We do not lack for good ideas. We lack for outraged citizens (Lou Dobbs does not count unless he learns the ten high-level threats and twelve core policies that he must address), honest politicians, and accountable corporations. And all of those live or die on how inert we are in both our thinking and our buying habits. We are a dumb nation led by a crooked government with war criminals in charge of the Executive. Bah humbug.

Really loved the book. Often any truly novel and intelligent concept comes in a format I wouldn't necessarily recommend to others: this book is a much-needed exception. You *can* broaden your horizons and enjoy yourself at the same time...who knew? It's an easy read but no less important for that fact. On the contrary, the concrete examples make the theory seem almost obvious--I suppose that's what a good author does. If you enjoyed _Freakonomics_, pick this one up. You won't be sorry.

If you want to understand and make use of a central puzzle at the heart of medical innovation, creative arts, telecomm (and many others), read Heller's new book. His key insight--in academic jargon known as the tragedy of the anti-commons--is that our old-fashioned ways of managing ownership frequently get in the way of creating wealth (and innovation) in the new economy.

Heller illustrates his observation--that in some cases there is such a thing as too much private property--with a jazillion well-researched examples that take you to the interior of big pharma, telecomm, software, and the like. The scope of his examples is breathtaking--and ultimately personal. His solutions run the gamut but focus largely on entrepreneurship...except that it is entrepreneurship informed by recognizing the opportunities and risks of gridlock that are outlined in his book (as well as his articles in Science, Harvard Law Review, and elsewhere).

This is a well-written book that is a pleasure to read and a real page-turner.