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Patent Theory versus Patent Law

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  • Tabarrok Alexander

    (George Mason University)

Abstract

According to the economic theory of patents, patents are needed so that pioneer firm have time to recoup their sunk costs of research and development. The key element in the economic theory is that pioneer firms have large, hard to recoup, sunk costs. Yet patents are not awarded on the basis of a firm's sunk costs. Patent law, in fact, ignores costs. The disconnect between patent law and patent theory suggests either that modifying patent law so that it better fits with patent theory would reduce the costs and inefficiencies associated with current patent practice or that the standard economic theory of patents is wrong.

Suggested Citation

  • Tabarrok Alexander, 2002. "Patent Theory versus Patent Law," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-26, October.
    • Handle: RePEc:bpj:bejeap:v:contributions.1:y:2002:i:1:n:9
    DOI: 10.2202/1538-0645.1039
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    1. Richard Strouse & Barbara Carlson & John Hall, "undated". "Report on Survey Methods for the Community Tracking Study's 1998-1999 Round Two Household Survey (Appendices)," Mathematica Policy Research Reports c54f48c5be584d29893813682, Mathematica Policy Research.
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    Cited by:

    1. Samuli Leppälä, 2016. "Antitrust exemptions for joint R&D improve patents," Public Choice, Springer, vol. 166(1), pages 29-52, January.
    2. Eli Dourado & Alex Tabarrok, 2015. "Public choice perspectives on intellectual property," Public Choice, Springer, vol. 163(1), pages 129-151, April.
    3. Adam Karbowski, 2021. "Unproductive entrepreneurship and patents," Bank i Kredyt, Narodowy Bank Polski, vol. 52(5), pages 473-494.
    4. Shawn P. Miller & Alexander Tabarrok, 2014. "Ill-Conceived, Even If Competently Administered: Software Patents, Litigation, and Innovation—A Comment on Graham and Vishnubhakat," Econ Journal Watch, Econ Journal Watch, vol. 11(1), pages 37-45, January.

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