Intellectual Property and the Economics of Product Differentiation

In Research Handbook on the Economics of Intellectual Property Law (Ben Depoorter & Peter Menell eds., Edward Elgar, 2018 Forthcoming)

U of Penn, Inst for Law & Econ Research Paper no. 18-25

35 Pages Posted: 8 Oct 2018  

Christopher S. Yoo

University of Pennsylvania Law School; University of Pennsylvania - Annenberg School for Communication; University of Pennsylvania - School of Engineering and Applied Science

Date Written: July 21, 2018

Abstract

The literature applying the economics of product differentiation to intellectual property has been called the most important development in the economic analysis of IP in years. Relaxing the assumption that products are homogeneous yields new insights by explaining persistent features of IP markets that the traditional approaches cannot, challenging the extent to which IP allows rightsholders to earn monopoly profits, allowing for sources of welfare outside of price-quantity space, which in turn opens up new dimensions along which intellectual property can compete. It also allows for equilibria with different welfare characteristics, making the tendency towards systematic underproduction more contingent and suggesting a broader range of policy options for promoting optimality. This Chapter reviews the economics of product differentiation, examining both the monopolistic competition and spatial competition lines of this scholarship. It then surveys the literature applying these approaches to patent, copyright, and trademark.

Keywords: Intellectual property law, law & economics, law & technology, patents, copyrights, trademarks, innovation, product differentiation, antitrust, competition policy, social welfare, Edward Chamberlin, monopolistic competition, spatial competition

JEL Classification: K11, K21, L11, O34

Suggested Citation

Yoo, Christopher S., Intellectual Property and the Economics of Product Differentiation (July 21, 2018). In Research Handbook on the Economics of Intellectual Property Law (Ben Depoorter & Peter Menell eds., Edward Elgar, 2018 Forthcoming); U of Penn, Inst for Law & Econ Research Paper no. 18-25. Available at SSRN: https://ssrn.com/abstract=3260025

Christopher S. Yoo (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom St.
Philadelphia, PA 19104-6204
United States
(215) 746-8772 (Phone)

HOME PAGE: http://www.law.upenn.edu/faculty/csyoo/

University of Pennsylvania - Annenberg School for Communication ( email )

3620 Walnut St.
Philadelphia, PA 19104-6220
United States
(215) 746-8772 (Phone)

University of Pennsylvania - School of Engineering and Applied Science ( email )

3330 Walnut St.
Philadelphia, PA 19104-6309
United States
(215) 746-8772 (Phone)

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