Marginal Revolution offers a compelling reason why you should donate to support a blog:
- Efficiency says that goods with zero marginal cost should have a zero price but without prices not only is the incentive to produce diminished but so is information about what to produce. (See Coase’s 1946 classic, The Marginal Cost Controversy, JSTOR). Donations allow prices to be set at MC while at the same time providing a (noisy) signal about where true economic value lies. In particular, Tyler and I know that we can appropriate more of our marginal product from professional work than we can from blogging yet it is conceivable that our marginal product is higher in blogging. Thus, to decide how much to invest in this venture we markup donations to get an estimate of our social value and we put positive weight on social welfare in our utility function.
Umm, yeah, that’s it.
But don’t worry, I won’t subject you either to reasoning like this or a request for funds!
If there were a Nobel Prize in irony, Marginal Revolution might win it. One of the fundamental problems with right-wing libertarian economics is that there are all sorts of worthwhile and even necessary things (like national defense) that the market won’t pay for. Blogs are one, because of the free rider problem. Even if a few people act against their own self-interest by contributing to Mr. Marginal, there is no real connection between what they contribute and what the blog is worth to all readers. If you’re left-wing and honest, you can panhandle. If you’re right-wing and honest, you can switch to subscriptions. And if you’re right-wing and dishonest, you can mumble about utility functions.