teamosil
DP Veteran
- Joined
- Oct 17, 2009
- Messages
- 6,623
- Reaction score
- 2,226
- Location
- San Francisco
- Gender
- Male
- Political Leaning
- Liberal
Money is the root of it all.
If the product is to be viable, and so very few if any are actually developing the technology... once said technology is developed those with a monopoly on this type of product would stand to make lots of money.
Which means, why wouldn't private companies invest in this? Might it be because it isn't all that viable, and won't be all that profitable?
No, that's where positive externalities come in. A positive externality is a benefit of a business activity that the business can't charge for. So, for example, you could have a company that provides a service that generates $100 a year in profit for them, but also generates $100 in positive externalities. If it costs $150 to run the company, it will stop operating because it is losing $50 a year. But, overall, the company operating actually generates $50 of profit per year, it's just that the company can't capture that profit.
So that's where the government needs to step in. To find a way to help the company realize that profit. Maybe by subsidizing the product, maybe by somehow forcing the people who benefit to pay for that benefit, maybe by helping the company exclude those who don't pay from getting the benefit, etc. The market alone won't correctly pick which companies should survive if there are uncontrolled positive externalities in the mix.