Vol 1: Theory Vol 2: Analytical Methods
Edited by Ben Depoorter, Peter Menell and David Schwartz
Chapter 8: Intellectual property and competition
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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