Transaction Costs and Patent Reform
17 Pages Posted: 5 Apr 2007
This article considers current proposals for patent law reform in light of a simple theory about intellectual property law: In a world without transaction costs, the assignment of property rights is not necessary to stimulate the optimal production of creative goods. Because potential users of inventions could contract for their creation, a compelling justification for granting property rights in these intangibles is the reduction of real-world transaction and information costs that hinder, or make impossible, contract formation between users and creators. Proposals for patent law reform, therefore, should be evaluated by whether a change in legal rights, or in the regulatory process increases or lowers these costs.
Keywords: patents, inventions, coase, transaction costs, ebay, reform
JEL Classification: I01, K12, K19
Suggested Citation: Suggested Citation