The production and allocation of information as a good that is enhanced with increased use

Information has some unique characteristics. Unlike most other goods and services, it is neither rival (use by one prevents use by others) nor non-rival (use by one does not affect use by others), but is enhanced with increased use, or 'additive'. Therefore a unique allocation system for both the production and consumption of information is needed. Under the current market-based allocation system, production of information is often limited through the exclusive rights produced by patents and copyrights. This limits scientists' ability to share and build on each other's knowledge. We break the problem down into three separate questions: (1) do markets generate the type of information most important for modern society? (2) are markets the most appropriate institution for producing that information? and (3) once information is produced, are markets the most effective way of maximizing the social value of that information? We conclude that systematic market failures make it unlikely that markets will generate the most important types of information, while the unique characteristics of information reduce the cost-effectiveness of markets in generating information and in maximizing its social value. We then discuss alternative methods that do not have these shortcomings, and that would lead to greater overall economic efficiency, social justice and ecological sustainability. These methods include monetary prizes, publicly funded research from which the produced information is released into the public domain, and status driven incentive structures like those in academia and the “open-source” community.