A Cautious Defense of Intellectual Oligopoly with Fringe Competition

Review Law & Economics, Vol. 5, No. 3, 2009

Stanford Law and Economics Olin Working Paper No. 374

13 Pages Posted: 21 May 2009 Last revised: 6 Feb 2011

Mark A. Lemley

Stanford Law School

Date Written: May 1, 2009

Abstract

Michele Boldrin and David Levine offer a strong attack on intellectual property (IP), which they call “intellectual monopoly.” In their view, IP is not necessary to encourage invention or creation. Quite the contrary, they argue that we get innovation from competition, not monopoly. Further, because monopoly imposes well-recognized social costs, we are better off without it if it doesn’t in fact spur new innovation.

Boldrin and Levine make a plausible case on their own terms. Nonetheless, I think their terms are misleading. IP rights are rarely if ever “intellectual monopolies.” Most patents, to say nothing of most copyrights, create no economic rents. What this means is that we can’t assume that IP rights generally impose deadweight losses on society. They cause deviation from atomistic, perfect competition, but they don’t cause monopoly pricing. With a small number of exceptions, therefore, they don’t cause the social harms Boldrin and Levine correctly associate with monopoly pricing.

Suggested Citation

Lemley, Mark A., A Cautious Defense of Intellectual Oligopoly with Fringe Competition (May 1, 2009). Review Law & Economics, Vol. 5, No. 3, 2009; Stanford Law and Economics Olin Working Paper No. 374. Available at SSRN: https://ssrn.com/abstract=1407798

Mark A. Lemley (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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