PICKING WINNERS AND LOSERS IN THE GLOBAL TECHNOLOGY RACE

Fears that the United States is losing its leadership position in technology have prompted the Clinton administration to develop an activist policy position that supports private sector research and development activities. Tantamount to picking ''winners and losers,'' the government, whether by mandate or by establishing a set of parameters guiding some type of competitive application process, would decide which technologies warrant future development with taxpayer supported funding. However, government subsidies designed to promote the development of new technologies often come at the expense of the diffusion of those same technologies. By limiting diffusion, these policies can impose substantial costs on society Eliminating problems associated with current government policies and fostering the diffusion of new technologies requires limiting the assignment of property rights and restructuring the rewards associated with inventive activity. Such a system would promote the diffusion (and ultimately) the creation of new technologies. This paper proposes a forced royalty system as a potential alternate.