Prices versus Prizes: Patents, Public Policy, and the Market for Inventions

66 Pages Posted: 28 Aug 2014 Last revised: 11 Sep 2014

Date Written: September 1, 2014

Abstract

I consider whether government prizes should replace market prices for inventions. The America COMPETES Reauthorization Act of 2010 establishes a framework for government prizes. I examine how antitrust and public policy towards patents should take into account the economic benefits of the market for inventions. I consider the limitations of a prize system in terms of economic efficiency. I find that the deadweight welfare loss argument for replacing market prices with government prizes is flawed. I show how prices in the market for inventions provide state-contingent signals that guide invention, commercialization, innovation, financing, and complementary inventions. I examine how prices in the market for inventions provide indicators of technological change. I conclude that replacing market prices with government prizes would harm invention, innovation and economic growth.

Keywords: Invention, R&D, competition, innovation, prices, prizes

JEL Classification: D40, O31, L10

Suggested Citation

Spulber, Daniel F., Prices versus Prizes: Patents, Public Policy, and the Market for Inventions (September 1, 2014). Northwestern Law & Econ Research Paper No. 14-15. Available at SSRN: https://ssrn.com/abstract=2488095 or http://dx.doi.org/10.2139/ssrn.2488095

Daniel F. Spulber (Contact Author)

Northwestern University - Kellogg School of Management ( email )

Kellogg Global Hub
2211 Campus Dr.
Evanston, IL 60208
United States
847-491-8675 (Phone)
847-467-1777 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
195
Abstract Views
1,099
rank
159,098
PlumX Metrics