Edited by Robert E. Litan
Chapter 6: Intellectual Property Rights and Economic Progress: A Review of the Literature
Jonathan D. Putnam and Andrew B. Tepperman 6.1 INTRODUCTION Intellectual property rights (IPRs) represent one of the first efforts to employ the ancient doctrines of private property as a means to a modern, utilitarian and social end: to ‘promote progress.’1 Possessing neither economic theory nor empirical evidence, the founding fathers nonetheless concluded that endowing creators with the private right to exclude others from using intangible creations of the human mind would result in tangible gains not only to the creators themselves but to their competitors, and to their customers. Today, 220 years after that conclusion was reached, the U.S., and nearly all other members of the World Trade Organization (WTO), confront claims both from those who argue that IPRs inhibit economic progress, and from those who argue that additional or expanded IPRs would accelerate such progress. In the absence of quantitative information about the effects of alternative policies, however, these disputes take on the cast of religious wars, complete with articles of faith. As in many such wars, the consequences of doctrinal ‘error’ can generally be known only in ‘the hereafter’, which means in the production and consumption decisions made by future generations. Since these consequences are usually difficult to observe or forecast, dire predictions of either rampant monopoly or rampant piracy have become prevalent. In political terms, the structural reasons for this conflict lie in the short-run division of interests between consumers and producers. IPRs give creative producers the right to exclude others from using their creation. Exclusivity restricts...
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