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On the macroeconomic effects of establishing tradability in weak property rights

In: Entrepreneurships, the New Economy and Public Policy

Author

Listed:
  • Gunnar Eliasson

    (Royal Technical University)

  • Clas Wihlborg

    (Copenhagen Business School)

Abstract

The New Economy is closely associated with computing & communications technology, notably the Internet. We discuss property rights to, and trade in, the difficult-to-define intangible assets increasingly dominating the New Economy, and the possibility of under-investment in these assets. For a realistic analysis we introduce a Schumpeterian market environment (the experimentally organized economy). Weak property rights prevail when the rights to access, use, and trade in intangible assets cannot be fully exercised. The trade-off between the benefits of open access on the Internet, and the incentive effects of strengthened property rights, depend both on the particular strategy a firm employs to secure property rights, and the protection offered by law. Economic property rights can be strengthened if the originator can find innovative ways to charge for the intangible assets. The extreme complexity of the New Economy and the large number of possible innovative private contract arrangements make it more important to facilitate the use and enforcement of private individualized contracts to protect intellectual property than to rely only on standard patent and copyright law. Enabling law is one proposed solution. Current patent legislation in the US has led to costly litigation processes weakening the position of small firms and individuals in patent disputes. The property rights of such firms and individuals could be strengthened with insurance or arbitration procedures.

Suggested Citation

  • Gunnar Eliasson & Clas Wihlborg, 2005. "On the macroeconomic effects of establishing tradability in weak property rights," Springer Books, in: Uwe Cantner & Elias Dinopoulos & Robert F. Lanzillotti (ed.), Entrepreneurships, the New Economy and Public Policy, pages 137-162, Springer.
  • Handle: RePEc:spr:sprchp:978-3-540-26994-6_9
    DOI: 10.1007/3-540-26994-0_9
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    Cited by:

    1. Gunnar Eliasson, 2011. "Advanced purchasing, spillovers and innovative discovery," Journal of Evolutionary Economics, Springer, vol. 21(1), pages 121-139, February.
    2. Eliasson, Gunnar & Eliasson, ├ůsa, 2004. "The Theory of the Firm and the Markets for Strategic Acquisitions," Ratio Working Papers 44, The Ratio Institute.
    3. Eliasson, Gunnar, 2004. "Ignorant Actors in the Resource Rich World of the Knowledge Based Economy - On Rational Management in an Experimentally Organized Economy (EOE)," Ratio Working Papers 47, The Ratio Institute.
    4. Dan Johansson, 2010. "The theory of the experimentally organized economy and competence blocs: an introduction," Journal of Evolutionary Economics, Springer, vol. 20(2), pages 185-201, April.

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