Rewards Versus Intellectual Property Rights
Harvard Law School, Olin Center for Law, Economics & Business, Discussion Paper No. 246
34 Pages Posted: 29 Jan 1999
Date Written: December 1998
This paper compares reward systems to intellectual property rights (patents and copyrights). Under a reward system, innovators are paid for innovations directly by government (possibly on the basis of sales), and innovations pass immediately into the public domain. Thus, reward systems engender incentives to innovate without creating the monopoly power of intellectual property rights, but a principal difficulty with rewards is the information required for their determination. We conclude in our model that intellectual property rights do not possess a fundamental social advantage over reward systems, and that an optional reward system--under which innovators choose between rewards and intellectual property rights--is superior to intellectual property rights.
JEL Classification: D23, K11, L10
Suggested Citation: Suggested Citation