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IPFS News Link • Government

The Horrors of Getting Approval for an Ice Cream Parlour in San Francisco

The tragedy of the anti-commons is a useful concept for understanding a prevalent type of government failure in both poor and rich countries–excessive permit and licensing requirements. A pervasive multiple licensing system can create an impenetrable conjunctive permission line that even the most energetic cannot overcome. To start a business, to build, to hire, to sell, you need first to convince bureaucrat A and B and C and D and so on. The longer the conjunctive line, the less frequently entrepreneurs enter the market with new products and services. The transaction costs for dealing with each bureaucrat are very high, as is the likelihood that any single one will say no. The upshot is an impoverished society. To take one example, in medieval times, barons who owned parcels of land along the Rhine River collected tolls from each ship that passed by. As a result, few ships sailed down the Rhine.
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