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InsiderOnline Blog: March 2012

Finally, a $50 Bulb

It’s now possible to spend $50 on one light bulb. No, there’s no burgeoning demand for luxury light bulbs. Rather, the federal government has been doing more counter-productive incentivizing. As Katherine Mangu-Ward explains (Reason, March 9), way back in 2007 Congress created a $10 million prize “to encourage the development of a cheap, green, domestic light bulb to replace the dearly departed Edison model.”

The winner, Dutch electronics company Philips, was the one and only entrant, suggesting that the prize failed to stimulate widespread additional private spending on R&D. The portion of the LED bulb made in America is less than initially envisioned. And the guidelines for pricing were utterly ignored: The goal was $22 price tag in the first year, falling rapidly to $8 by year three.

Meanwhile, a lot has happened in those five years. Americans are (perhaps grudgingly) adopting new light bulb technologies; experimenting with CFLs, halogens, and LEDs. The florescence of options was partially due to the fact that the relevant technologies reached a natural tipping point, partially due to the increasing cost of energy, and partially a response to the impending ban. […]

In this case, the prize was a first-past-the-post arrangement. So electronics giant Philips, which also makes a Chinese-manufactured version of the same product for half the cost, quickly fiddled with the specs and figured out a way to make some of the chips in San Jose—all jobs that will go to American citizens, no doubt—and do the assembly in Wisconsin. Two other companies had announced their intention to join the fray, General Electric and Lighting Science Group, when the Department of Energy abruptly declared a winner.

Posted on 03/12/12 06:46 PM by Alex Adrianson

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