Boldrin and Levine (2005)
Contents
Source Details
Boldrin and Levine (2005) | |
Title: | Intellectual property and the efficient allocation of social surplus from creation |
Author(s): | Boldrin, M., Levine, D. K. |
Year: | 2005 |
Citation: | Boldrin, M., & Levine, D. K. (2005). Intellectual property and the efficient allocation of social surplus from creation. Review of Economic Research on Copyright Issues, 2(1), 45-67. |
Link(s): | Definitive , Open Access |
Key Related Studies: | |
Discipline: | |
Linked by: | Raustiala and Sprigman (2019) |
About the Data | |
Data Description: | The authors assess the NIP (non IP) system and characterize its properties. |
Data Type: | Primary and Secondary data |
Secondary Data Sources: | |
Data Collection Methods: | |
Data Analysis Methods: | |
Industry(ies): | |
Country(ies): | |
Cross Country Study?: | No |
Comparative Study?: | No |
Literature review?: | No |
Government or policy study?: | No |
Time Period(s) of Collection: | |
Funder(s): |
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Abstract
"In the modern theory of innovation, monopoly plays a crucial role both as a cause and an effect of creative economic activity. Innovative firms, it is argued, would have insufficient incentive to innovate should the prospect of monopoly power not be present. This theme of monopoly runs throughout the theory of growth, international trade, and industrial organization. We argue that monopoly is neither needed for, nor a necessary consequence of innovation. In particular, intellectual property is not necessary for, and may hurt more than help, innovation and growth. We show that, in most circumstances, competitive rents allow creative individuals to appropriate a large enough share of the social surplus generated by their innovations to compensate for their opportunity cost. We also show that, as the number of pre-existing and IP protected ideas needed for an innovation increases, the equilibrium outcome under the IP regime is one of decreasing probability of innovation, while this is not the case without IP. Finally, we provide various examples of how competitive markets for innovative products would work in the absence of IP and critically discuss a number of common fallacies in the previous literature."
Main Results of the Study
- Contrary to established wisdom, more IP protection is not better than less IP protection. In course of time, IP protection may lead to a constant decrease in the amount of creation. *In a NIP (non-IP) system, the best creative individuals are allowed to earn large amounts of money. In the IP system, income inequality gets larger without gains for social welfare.*In the economic analysis of innovation, the economically relevant unit is a copy of an idea. These economically valuable copies of ideas are the product of intentional and costly human efforts.
Policy Implications as Stated By Author
If IP protection was almost entirely abolished it would increase creative activity, it would result in a more efficient allocation of its surplus and to higher social welfare.
Coverage of Study
Datasets
Sample size: | 1 |
Level of aggregation: | Economic model |
Period of material under study: | Non stated |