Research Handbook on the Economics of Intellectual Property Law
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Research Handbook on the Economics of Intellectual Property Law

Vol 1: Theory Vol 2: Analytical Methods

Edited by Ben Depoorter, Peter Menell and David Schwartz

Both law and economics and intellectual property law have expanded dramatically in tandem over recent decades. This field-defining two-volume Handbook, featuring the leading legal, empirical, and law and economics scholars studying intellectual property rights, provides wide-ranging and in-depth analysis both of the economic theory underpinning intellectual property law, and the use of analytical methods to study it.
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Chapter 8: Intellectual property and competition

Herbert Hovenkamp


Both competition under constant technology and innovation promote economic growth by granting many of the returns to the successful developer. However, profits can also come from practices that reduce output, in some cases by reducing quantity, or in others by reducing innovation. Most intellectual property (IP) rights are insufficient to produce durable monopoly, although they do facilitate product differentiation. We also tend to see IP rules as creating a property rights system in which competition exists for the property rights themselves. Under conventional neoclassical assumptions, both innovation and competition increase output, whether measured by the number of units or their quality. The policy trick is to find the ‘sweet spot’ where the aggregate effects of IP and competition policy are optimized.

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