2. Investing in Knowledge 2.1 Intellectual Property: Tolls on the Information Highway 2.2 Ideas and Innovations 2.3 Prizes 2.4 Choosing among Ideas 2.5 Contests 2.6 Efficient Investments in Knowledge 2.7 Summary 2.8 Technical Notes

In the digital age, it has become fashionable to speak of “information goods”. By information goods, we usually mean computer software and entertainment products stored in digital form, such as music. Information goods have a feature that sets them apart from ordinary private goods. They are public goods in the technical sense meant by economists: use by one person does not preclude use by any other person and does not cost additional resources, except the small cost of distributing them. That is, the use of such a good is nonrival. Further, it is difficult to exclude unauthorized users from using such a product once it exists. Intellectual property rights, usually copyrights, are the means by which society tries to create a workable market in information goods.