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Subsidies or Tax Breaks Versus Intellectual Property Rights: Dual Markets

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  • Skliaustyte, Egle
  • Weber, Matthias

    (University of St. Gallen)

Abstract

Intellectual property rights are monopoly rights, which have undesirable welfare properties. Therefore, several studies suggest to use rewards as incentives for innovation instead. However, these studies have thus far had little effect on actual policy, possibly because such rewards may be difficult to implement in practice. We suggest a way of providing incentives to originators that is easy to implement. This is possible if there is an additional market in which the originator operates, where copying is not easily possible. Taking the music industry as example, copyrights in the records market could be replaced by subsidies or tax breaks in the market for live performances. We provide a modeling framework that can be used to analyze in which cases the replacement of intellectual property rights in one market with subsidies in another market is welfare improving or even pareto efficient.

Suggested Citation

  • Skliaustyte, Egle & Weber, Matthias, 2021. "Subsidies or Tax Breaks Versus Intellectual Property Rights: Dual Markets," SocArXiv x87fy, Center for Open Science.
    • Handle: RePEc:osf:socarx:x87fy
    DOI: 10.31219/osf.io/x87fy
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    References listed on IDEAS

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    1. Chari, V.V. & Golosov, Mikhail & Tsyvinski, Aleh, 2012. "Prizes and patents: Using market signals to provide incentives for innovations," Journal of Economic Theory, Elsevier, vol. 147(2), pages 781-801.
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    8. Barbara Biasi & Petra Moser, 2018. "Effects of Copyrights on Science - Evidence from the US Book Republication Program," NBER Working Papers 24255, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Weber, Matthias, 2022. "From Individual Human Decisions to Economic and Financial Policies," SocArXiv 5ju7z, Center for Open Science.

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