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Intellectual Property: When Is It the Best Incentive System?

  • Gallini, Nancy
  • Scotchmer, Suzanne

Our objective in this paper is to review what economists have said about incentive schemes to promote R&D, including intellectual property. While we focus on environments in which other forms of protection are not available, we note that other protections can obviate the need for any formal reward system. In Section II, we compare intellectual property to alternative incentive schemes. In Section III we review optimal design issues for intellectual property, especially the question of patent breadth, and in Section IV we turn to the special problems that arise when innovation is cumulative. In Section V, we summarize the arguments for and against intellectual property. We comment on whether the design recommendations of economists can actually be implemented, and argue that IP regimes should be designed so that the subject matter of each one has relatively homogeneous needs for protection.

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Paper provided by Department of Economics, Institute for Business and Economic Research, UC Berkeley in its series Department of Economics, Working Paper Series with number qt9wx2c2hz.

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Date of creation: 01 Aug 2001
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Handle: RePEc:cdl:econwp:qt9wx2c2hz
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  3. Suzanne Scotchmer., 1999. "Delegating Investment in a Common-Value Project," Economics Working Papers E99-266, University of California at Berkeley.
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  27. Kitch, Edmund W, 1977. "The Nature and Function of the Patent System," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 265-90, October.
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