Boldrin And Levine: Intellectual Property

Check out Michele Boldrin’s and David Levine’s joint work on intellectual property if you are interested in such issues. For example, this abstract of their paper titled “The Case Against Intellectual Property”, puts it clearly:

Argues that the downstream licensing agreements implicit in current intellectual property law are anti-competitive and that there should be a presumption for intellectual goods as with other goods that competition is likely to outperform monopoly.

I’ll be interested to see how they handle the age-old argument of the tradeoff between the incentive to innovate and be creative, and the deadweight loss of monopoly rents that accompany such property rights. I vacillate between “patents are a government-granted monopoly” and “patents internalize optimal innovation incentives, but are fussy and fidgety and fall prey to the knowledge problem”, which means I’m not high on them by any extent.

Interesting …

One thought on “Boldrin And Levine: Intellectual Property

  1. DISCLOSURE STATEMENT – I am an inventor. The corporation which employed me and funded my efforts chose to have me assign my rights to the corporation and chose to have me seek patent protection for the results of my work on their behalf.

    The inventor does not have an obligation to patent. (CocaCola syrup is not patented.) The author/composer/performer does not have the obligation to copyright. If either believes that he/she will benefit to a greater degree as the result of market competition, they may choose not to seek exclusivity for a period and simply not protect their work.

    The fact that most inventors and most artists seek such exclusivity for a period suggests strongly that experience in the marketplace of ideas has convinced them that they benefit from such exclusivity.

    The issue of downstream licensing agreements is particularly instructive. When an inventor is not also a manufacturer, or an employee of a manufacturer, that inventor must seek a manufacturer to commercialize the product which incorporates the invention. The inventor typically seeks protection against the potential manufacturers using the invention without compensation. Patents provide such protection. The candidate manufacturers must then assess the likelihood that they can recover their investment in developing and commercializing the product, particularly if the technology is available to one or more of their competitors as well.

    My experience is that manufacturers are often willing to accept limited periods of exclusivity, to provide the opportunity to establish the product in the market, followed by non-exclusive access for the balance of the life of the patent. This allows the “first to market” manufacturer to establish market “leadership” and temporary product differentiation, and then to take advantage of competition to broaden the market for the product. This approach is a workable combination of short term monopoly and longer term competition, which balances innovation incentives and competitive performance. Cross-licensing among manufacturers is one result of such IP and marketing approaches.

    I can only hope that, if the government decides (in its infinite wisdom) to experiment with elimination or devaluation of intellectual property rights, it does so with rap music, or pet food, or left-handed widgets, or some other relatively inconsequential property class. Conducting a failed experiment of this type in the prescription pharmaceuticals industry (as I suspect some are contemplating)could lead to a disaster of monumental proportions. The result could easily be reduced prescription drug prices (The operation was a success; …), and a reduction in pharma research (…but, the patient died.)

    Sounds like a fertile area for Experimental Economics research.

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