To understand Hirshleifer’s<br />
argument, consider the recent innovation of the Ginger scooter,<br />
now relabeled the Segway, said to revolutionize urban<br />
transportation, and grant that this unlikely prediction was actually<br />
true. How could the inventor, Dean Kamen, profit from this<br />
knowledge? There was a point in the development of the scooter at<br />
which Mr. Kamen was the only one to know that urban<br />
transportation is soon to be revolutionized, and that the automobile<br />
itself is soon to be obsolete. Rather than surrounding himself with<br />
patents, and hawking his knowledge to venture capitalists, as he<br />
did, he could simply have sold short automobile stock using<br />
whatever funds he had available to him, and leveraging to the<br />
maximum extent possible. Then, rather than developing the scooter<br />
himself, he should simply have mailed the blueprints to the New<br />
York Times. As soon as the blueprints were published, the stock<br />
owning public would naturally realize that the automobile industry<br />
is on the way out, and the price of automobile stocks would<br />
plummet. Mr. Kamen, having foreseen this, and having sold short<br />
the stocks prior to publishing his blueprints, would naturally have<br />
made a killing.<br />
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