A Transaction Cost Theory of Patent Law

40 Pages Posted: 28 Apr 2003  

Paul J. Heald

University of Illinois College of Law

Date Written: October 17, 2005

Abstract

Patent law is under-theorized in the sense that the predominating incentive-based justifications cannot by themselves adequately explain empirical evidence on patenting gathered by research economists. This article provides an alternative justification for patent law based on private transaction costs savings offered by patent law in comparison to alternative options available to those who wish to exploit information assets. In particular, it identifies striking parallels to corporate law as described in recent scholarship and shows how patents act as affirmative asset partitions, ameliorate significant team production problems, and encourage technology transfer. Even if the patent system provides no significant incentives to invent, it can be explained and justified in terms of transaction costs savings alone.

Keywords: patents, transaction costs, new institutional economics, team production, asset partition, technology transfer, incentives

JEL Classification: O3, H42, K00, L1

Suggested Citation

Heald, Paul J., A Transaction Cost Theory of Patent Law (October 17, 2005). Ohio State Law Journal, Vol. 66, p. 473, 2005. Available at SSRN: https://ssrn.com/abstract=385841 or http://dx.doi.org/10.2139/ssrn.385841

Paul J. Heald (Contact Author)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
706-372-2567 (Phone)

HOME PAGE: http://www.law.illinois.edu/faculty/profile/PaulHeald

Paper statistics

Downloads
965
Rank
17,362
Abstract Views
6,411