Intellectual Property, Innovation, and Decentralized Decisions

Abstract:     
This essay proposes a new way to assess the desirability of intellectual property rights.

Traditionally, intellectual property assignment is assessed based on a incentive/monopoly pricing tradeoff. I suggest they should be further assessed by their effects on the decision architectures surrounding the property right - their effects on how firms make product innovation decisions. The reason is that different decisional structures for product development can be are fundamental to the performance of firms, industries, and even the economy as a whole.

The organizational economics literature can help with this assessment. It makes an important and useful distinction between hierarchical (centralized) and polyarchical (decentralized) decision architectures. The key point of this paper is that government's decisions with respect to property assignments can steer decision architectures toward a polyarchical or hierarchical architecture, respectively.

Keywords: Innovation, intellectual property, copyright, patent, organization economics, decentralization

Accepted Paper Series