An Economic Analysis of Property Rights in Information: Justifications and Problems of Exclusive Rights, Incentives to Generate Information, and the Alternative of a Government-Run Reward System
61 Pages Posted: 9 Apr 2005 Last revised: 16 Oct 2015
This article examines and questions the traditional justifications for intellectual property (I.P.) rights in America (focusing on copyright and patent law), and explores incentives necessary to induce the creation of these works of information. I conclude that changes are needed to I.P. law in order to best foster society's dual goals of 1) promoting incentives to create I.P. works (such as currently patented drugs), while also 2) maximizing distribution of those products to all consumers who would stand to gain (and not merely those who can afford the monopoly price charged).
Hence, I suggest the creation of a Government-Run Reward System to best serve both of society's goals: incentives distribution. Under the reward system, innovators would be paid directly by the government for their intellectual property creations. In turn, their works would pass immediately into the public domain so that they are freely reproducible and distributable at their marginal cost of production (rather than the monopoly price which prevails under patent and copyright law today). In its ideal form, the reward system thereby allows for both socially optimal creation and distribution of intellectual property works, eliminating the deadweight social loss that plagues us today.
Keywords: intellectual property, reward, economic analysis, I.P., rights, government reward system
JEL Classification: A10, A12, K00, K10, K11, D23, G38, D78
Suggested Citation: Suggested Citation