Patents and the Wealth of Nations
25 Pages Posted: 9 May 2016 Last revised: 2 Jul 2016
Date Written: May 6, 2016
If both reason and evidence point to the crucial role played by property rights in the wealth of nations, then how can some scholars hold that strong rights to intellectual property (IP) are hindering innovation and holding back economic growth? Should not the same logic hold for IP as for any other kind of property? This paper therefore analyzes the evidence from broad literatures n economic history and empirical microeconomics. It finds that the weight of the evidence from two very different bodies of scholarship, employing very different approaches to evidence — one based on mastering the facts of history, the other based on statistical modeling — yield the same answer: there is a causal relationship between strong patents and innovation.
Evidence and reason therefore suggest that the burden of proof falls on those who claim that patents frustrate innovation. Convincing scholars who are not predisposed to accept that claim will require IP critics to: (1) develop a coherent theory based on first principles about why patent rights are fundamentally different from other property rights; (2) test that theory against carefully-retrieved historical facts and appropriately-specified statistical models; and (3) consider their theory and evidence in light of alternative theories and alternative evidence in a dispassionate manner.
Keywords: Patents, Property Rights
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