I have just finished reading Michael Heller’s The Gridlock Economy. This is a terrific book that describes what happens when there is too much ownership of complementary assets. For instance, when there is too diverse ownership of complementary patents, innovators attempting to launch products combining them are deterred by a patent thicket. When blocks of land are parceled up between different owners, developers face a holdout problem in acquiring the whole lot.
What is good about the book is Heller’s simple explanations. He has a gift for word-generation. For instance, in describing the optimal level of property rights he refers to the ‘Goldilocks problem’ off getting it just right. There are plenty of good examples and stories and a few hints at solutions.
If I have issues with the book, it is on the issue of depth. First, Heller does not cite or consider the extensive economic literature on optimal ownership. For example, the work of Hart and Moore was seminal in identifying the problems caused by diverse control rights over complementary assets. It is not to be found here. Second, the solutions Heller examines are imperfect and little new is offered. There is no research reported that examines the evidence on how the trade-offs have resolved themselves. This is disappointing because it leaves the reader knowing that there are issues but with little to go on in how to optimally resolve those issues.
Nonetheless, it is a highly recommended read.