So-called intellectual property is in fact an “intellectual monopoly” that hinders For the Lawrence R. Klein lecture, see Boldrin and Levine (b). Against Intellectual Monopoly So-called intellectual property is in fact an ‘ intellectual monopoly’ that hinders rather than Michele Boldrin and David K. Levine. Cambridge Core – Industrial Economics – Against Intellectual Monopoly – by Michele Michele Boldrin, University of Minnesota, David K. Levine, University of.

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Tags Free Markets Legal System. One of inttellectual most important recent advances in libertarian theory has come in the field of intellectual property. Several writers, Stephan Kinsella most notably among them, have argued that patents and copyrights should not form part of a proper libertarian law code. These writers modify and extend the work of Murray Rothbard, who allowed copyrights but not patents.

These writers must confront an important objection.

However convincing one may find their analysis of the implications of libertarian theory, what if the policy that they recommend leads to economic disaster?

Without patents, would not inventions drastically decrease, crippling economic progress? Could writers earn a decent return without being able to copyright their work?

If one sets aside these questions, intellectual that libertarian theory requires that patents and copyrights be ended and that is that, critics stand ready to pounce. They will say that libertarians dogmatically disregard consequences, insisting on principles at whatever cost.

Against Intellectual Monopoly enables us to meet this challenge on its own ground.

Mises Review

They are mainstream neoclassical economists and their ethical views seem, broadly speaking, to be utilitarian. Arguing strictly on consequentialist grounds, they oppose intellectual property. Patents and copyrights do not promote economic progress but impede it. Their argument for this view consists of two parts. First, even if patents and copyrights encourage innovation, they produce so many bad effects that, on balance, these measures have negative consequences.

Journal of Law, Information and Science

Second, though benefits from promoting new ideas of patents and copyright cannot on a priori grounds be ruled out, there is strong reason to believe that these effects have been greatly exaggerated.

I can discuss only a small sample of the profusion of arguments the authors deploy in support of these contentions. They begin by posing a sharp challenge to those who think patents essential for innovation. Innovative industries have bldrin flourished without them:.

In few industries has there been such extensive innovation as in the software industry — and few technologies have changed our way of life so much. Will it surprise you to learn that virtually none of the innovations in this industry took place with the protection of intellectual monopoly?


Leviine monopoly is not a cause of innovation, but rather an gaainst consequence of it.

Against Intellectual Monopoly, by Michele Boldrin | Mises Institute

In a young, dynamic industry full of ideas and creativity, intellectual monopoly does not play a useful role. Even if this is true, though, this shows only that patents are unneeded; why are they bad? Boldrin and Levine answer that the struggle to secure patents often involves costly and unproductive activities:. Part of the enormous increase in the number of patents is because patents beget yet other patents to defend against existing patents.

But the most obvious cost of patents lies not in the side effects of the struggle to obtain them but in their direct purpose:. The “submarine patent” is an especially insidious means of levkne competition. Here, someone files levibe a patent on a general idea without completing the application process:. Although the patent term was measured from the date of monopo,y, … the validity of the patent [is] … measured from the day of submission.

Hence, the submarine patent — the filing of a useless patent on a broad idea that might, one day, be useful. The existence of the filing is secret … and the application process is dragged out until some actual innovator invests the time and effort to make the idea useful. At that time, the amendment goldrin stops, the patent is awarded, and the submarine surfaces to demand license fees.

As this example shows, the authors display a thorough familiarity with the ins and outs of intellectual property law. But monoploy more important is a less technical point that they emphasize.

People learn through imitating others, and to the extent that patents and copyrights impede this process, they block levlne. Imitation is a great thing. It is among the most powerful technologies humans have ever developed … imitation is a technology that allows us to increase productive capacity.

Innovators increase productive capacity directly, while imitators increase productive capacity by purchasing one or more copies of the idea and then imitating it. It is far more sensible simply to prevent imitation in the first place, by aggressive legal enforcement of patents and other forms of intellectual monopoly. Even if mnopoly authors are so far correct, they must confront a formidable objection.

Suppose, as they wish, that patents and copyrights were abolished. According to their neoclassical model of competition, is there not a blldrin argument that innovators could derive little profit? Once the innovation is on the market, copiers can quickly expand production until marginal revenue equals marginal cost, driving profits down to nothing.


Boldrin and Levine prove fully equal to the challenge. Within their neoclassical framework, they find ample room for profit for both innovators and imitators:. Because copies of ideas are always limited … they always command levie positive price.

Against Intellectual Monopoly

Nowhere is limited capacity more important than in a nascent industry. The first entrants earn large rents, over and above the opportunity cost of capital, for quite a while, until enough productive capacity is built up to push prices down toward marginal cost.

In contrast to shoe factories, even with minimal installed capacity, the copies of a book that can be made over an extremely short period of time may be so many as to essentially flood the market, dropping the price to near marginal cost almost immediately.

The rent is insufficient because, say, the book is very complicated, and it took a long time to complete. We are not arguing [that] the case of large initial capacity and small market size cannot arise, just that it is far from being the only possible case. For one thing, the “first-mover advantage” of the innovator generally offers ample opportunities for profit.

What if the objector persists? Even if innovators can gain profits without recourse to intellectual monopoly, can they not in at least some cases gain higher profits with bldrin protection of their discoveries?

If so, perhaps the gains from such innovations would outweigh all the considerations the authors have amassed on the other side. Insofar as innovators have unique ideas, it may make sense to reward them with monopolies to make sure we get advantage of their inellectual talents.

In addition to the sources our authors cite to back up this claim, Murray Rothbard also notes the importance of simultaneous discovery in Man, Economy, and State.

The point was also a favorite of my old friend S. Colum Gilfillan, and his books from the s, The Sociology of Invention and Inventing the Shiplend strong support to the authors’ case. All future work on intellectual property will have to take account of Against Intellectual Monopoly. The Mises Review 15, No. View the discussion thread.

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