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> This seems true enough - from a (rational) game-theoretic perspective, > why should any victim really fight hard to overcome a troll, if in >

> This seems true enough - from a (rational) game-theoretic perspective, > why should any victim really fight hard to overcome a troll, if in > doing so they risk big losses, and don't gain any advantage over their > competition even if they win? If prices were at a near-optimal level to begin with and then are raised across-the-board by some external factor, each firm may retain the same slice of the pie they had before but the pie will be smaller. Any given firm will see a reduction in their profits after everyone in their market starts to pay the troll-toll. The demand curve will remain constant but the supply curve will shift to the right. Less product will be sold at a higher price and there will be dead-weight losses. However, you bring up a very valid point--what happens if the losses for each individual firm are less than the cost of paying off the troll, but the losses as a whole are greater? Then it would be in the interests of all firms in a market to band together and fight the troll collectively.

sirmarksalot 14y ago
That sounds like the definition of a public good. It costs money to create the good (defeat the troll), but once the good is created, there's no way to control access to it (once the patent is invalidated, anyone can use it). A rational actor always wants to be the one who didn't pay to create the good, so only a benevolent, irrational third party will ever create it. The problem with a pact as you describe it is that joining is not mandatory, and a rational actor will just let everyone else join the pact, and the pact will never get formed. There needs to be an incentive for joining the pact, as well. Patent pools, ironically, may be such an incentive. I'm just glad that New Egg decided to be irrational this time around.
- rhizome 14y ago
  I think there's something to be said for differentiation being borne of irrationality. Apple's market priorities, for example. Is there a concept of passive players constituting the majority of the beneficiaries of public goods, i.e. parasites?

sirmarksalot 14y ago

That sounds like the definition of a public good. It costs money to create the good (defeat the troll), but once the good is created, there's no way to control access to it (once the patent is invalidated, anyone can use it). A rational actor always wants to be the one who didn't pay to create the good, so only a benevolent, irrational third party will ever create it. The problem with a pact as you describe it is that joining is not mandatory, and a rational actor will just let everyone else join the pact, and the pact will never get formed. There needs to be an incentive for joining the pact, as well. Patent pools, ironically, may be such an incentive. I'm just glad that New Egg decided to be irrational this time around.

rhizome 14y ago
I think there's something to be said for differentiation being borne of irrationality. Apple's market priorities, for example. Is there a concept of passive players constituting the majority of the beneficiaries of public goods, i.e. parasites?