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Mordecai Kurz
Says More…
This week in Say More, PS talks with Mordecai Kurz, Joan Kenney Emeritus Professor of Economics at Stanford University.
Project Syndicate: “Contrary to the longstanding conventional wisdom,” you wrote last year, “the monopoly power conferred by new technologies” is not short-lived, nor is it a “small price to pay for the associated benefits.” Not only does excessive market power pose a threat to democracy; you explain in your book, The Market Power of Technology: Understanding the Second Gilded Age, that it also impedes the diffusion of innovations, as your General Electric case study shows. What strategies did GE use to slow the diffusion of electricity, and how similar are they to those of today’s digital-technology firms?
Mordecai Kurz: GE’s tactics were very similar to those of contemporary firms. First, it used a patent strategy to prolong the period over which all its technologies for producing electricity were protected from competition. For example, it patented every component of the light bulb – the glass, casing, etc. – and virtually all equipment used in the production of its lamps. With this “patent pyramid,” it preserved its market power long after the key patent for Thomas Edison’s carbon filament bulb expired in 1897.
GE’s invention of the modern tungsten filament in 1909 consolidated its monopoly in light bulbs. GE also redesigned a large number of new products (many of which it did not invent) – from electric toasters to flexible X-ray machines and, later, home appliances, industrial equipment, radio and television networks, magnetic resonance imaging (MRI) scanners, and jet engines – and marketed them under patent protection.