Innovation or Monopoly? Making Patents Work - When evaluated from an economic perspective,
30 November 2022
The issue was ultimately resolved with the unification of Germany in 1871 and the passage of a national Patent Act in 1877, which Fritz Machlup and Edith Penrose view as a “victory of the allied forces of protectionism: the acceptance of the idea of protection of industry against competition from abroad as well as from domestic imitators.”29 26. [...] As Fritz Machlup stated in his testimony to the Senate Judiciary Committee in 1958, “perhaps it is necessary to mention, though it ought to be commonplace, that the rejection of the notion of private property in ideas implies neither antagonism to the institution of private enterprise nor hostility to the patent system.”36 It is the role of the economist to assess the potential welfare effects of. [...] Thus, defining patentability, the scope of the patent and the duration of the patent are all factors that need to be evaluated when managing the intellectual commons. [...] The costs of monopoly power are well known to economists, dating back to the 19th-century work of Jules Dupuit and Alfred Marshall.46 In 1954, Arnold Harberger developed a formal approach to the study of monopoly, highlighting the deadweight loss generated by the higher prices and restricted output of the monopolist. [...] While the goal of the patent system is to promote innovation and ultimately expand the pool of knowledge, monopoly rents create incentives to extend the period of the patentee’s exclusivity.