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The Case against Patents

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  • Michele Boldrin
  • David K. Levine
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    Abstract

    The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. Both theory and evidence suggest that while patents can have a partial equilibrium effect of improving incentives to invent, the general equilibrium effect on innovation can be negative. A properly designed patent system might serve to increase innovation at a certain time and place. Unfortunately, the political economy of government-operated patent systems indicates that such systems are susceptible to pressures that cause the ill effects of patents to grow over time. Our preferred policy solution is to abolish patents entirely and to find other legislative instruments, less open to lobbying and rent seeking, to foster innovation when there is clear evidence that laissez-faire undersupplies it. However, if that policy change seems too large to swallow, we discuss in the conclusion a set of partial reforms that could be implemented.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.1.3
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    Bibliographic Info

    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 27 (2013)
    Issue (Month): 1 (Winter)
    Pages: 3-22

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    Handle: RePEc:aea:jecper:v:27:y:2013:i:1:p:3-22

    Note: DOI: 10.1257/jep.27.1.3
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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Nuvolari, A., 2004. "Collective invention during the British Industrial Revolution: the case of the Cornish pumping engine," Working Papers 04.02, Eindhoven Center for Innovation Studies.
    2. Alessandro Nuvolari, 2001. "Collective Invention during the British Industrial Revolution The Case of the Cornish Pumping Engine," DRUID Working Papers 01-05, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    3. Boyan Jovanovic & Glenn MacDonald, 1994. "The Life-Cycle of a Competitive Industry," NBER Working Papers 4441, National Bureau of Economic Research, Inc.
    4. Michele Boldrin & David K Levine, 2004. "The Economics of Ideas and Intellectual Property," Levine's Working Paper Archive 122247000000000631, David K. Levine.
    5. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
    6. Shubham Chaudhuri & Pinelopi K. Goldberg & Panle Jia, 2006. "Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India," Working Papers id:772, eSocialSciences.
    7. Carl Shapiro, 2008. "Patent Reform: Aligning Reward and Contribution," NBER Chapters, in: Innovation Policy and the Economy, Volume 8, pages 111-156 National Bureau of Economic Research, Inc.
    8. Juan A. Correa, 2012. "Innovation and competition: An unstable relationship," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(1), pages 160-166, 01.
    9. Michele Boldrin & David K Levine, 2008. "Against Intellectual Monopoly," Levine's Bibliography 122247000000002371, UCLA Department of Economics.
    10. Josh Lerner, 2009. "The Empirical Impact of Intellectual Property Rights on Innovation: Puzzles and Clues," American Economic Review, American Economic Association, vol. 99(2), pages 343-48, May.
    11. Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring.
    12. Nuvolari, Alessandro, 2006. "The Making of Steam Power Technology: A Study of Technical Change during the British Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 66(02), pages 472-476, June.
    13. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
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    Cited by:
    1. S. Bakhtiari & A. Minniti & A. Naghavi, 2013. "Multiproduct Multinationals and the Quality of Innovation," Working Papers wp879, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Lin, Hwan C., 2012. "Switching from Patents to an Intertemporal Bounty in a Non-Scale Growth Model: Transitional Dynamics and Welfare Evaluation," MPRA Paper 49782, University Library of Munich, Germany, revised 12 Sep 2013.
    3. Christian Le Bas & Julien Pénin, 2014. "Patents and innovation : Are the brakes broken, or how to restore patents’ dynamic efficiency ?," Working Papers of BETA 2014-02, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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