Encyclopedia of Law and Economics

2019 Edition
| Editors: Alain Marciano, Giovanni Battista Ramello

Intellectual Property: Economic Justification

  • Dennis W. K. KhongEmail author
Reference work entry
DOI: https://doi.org/10.1007/978-1-4614-7753-2_697

Definition

Economic justification for intellectual property means the economic reason for establishing and supporting a system of intellectual property laws. It begins with the characteristics of information as public goods (Arrow 1962): non-rivalry in consumption and non-excludability. Intellectual property rights confer upon the right holders an exclusive right to legally compel users to buy a genuine product from the right holders or to obtain a license from them. Intellectual property rights are to prevent a market failure due to free-riding activities of non-payers. In general, intellectual property rights can be grouped into two families according to the function of the information therein: information as a good and information as a signal. Examples of intellectual property rights in the form of information as a good are copyright, patents, industrial designs, layout-designs of integrated circuits, and confidential information, while examples of intellectual proprietary rights...

This is a preview of subscription content, log in to check access.

References

  1. Akerlof GA (1970) The market for “lemons”: quality uncertainty and the market mechanism. Quarterly J Econ 84:488–500CrossRefGoogle Scholar
  2. Akerlof GA, Arrow KJ, Bresnahan TF, Buchanan JM, Coase RH, Cohen LR, Friedman M, Green JR, Hahn RW, Hazlett TW, Hemphill CS, Litan RE, Noll RG, Schmalensee R, Shavell S, Varian HR, Zechkauser RJ (2002) Brief as amici curiae in support of petitioners in Eldred v Ashcroft 537 US 186 (2003) (No 01–618)Google Scholar
  3. Arrow K (1962) Economic welfare and allocation of resources for inventions. In: Universities-National Bureau Committee for Economic Research C on EG of the SSRC (ed) The rate and direction of inventive activity: Economic and social factors. Princeton, New Jersey University Press, pp 609–626Google Scholar
  4. Aziz S (2003) Linking intellectual property rights in developing countries with research and development, technology transfer, and foreign direct investment policy: a case study of Egypt’s pharmaceutical industry. ILSA J Int Comp Law 10:1–34Google Scholar
  5. Chamberlin EH (1933) The theory of monopolistic competition: a re-orientation of the theory of value. Harvard University Press, CambridgeGoogle Scholar
  6. Coase RH (1974) The lighthouse in economics. J Law Econ 17:357–376CrossRefGoogle Scholar
  7. Economides NS (1988) The economics of trademarks. Trademark Report 78:523–539Google Scholar
  8. Fink C, Maskus KE (eds) (2005) Intellectual property and development: lessons from recent economic research. World Bank and Oxford University Press, Washington, DCGoogle Scholar
  9. Gordon WJ (1992) Asymmetric market failure and prisoner’s dilemma in intellectual property. Univ Dayt Law Rev 17:853–870Google Scholar
  10. Gordon WJ (1982) Fair use as market failure: a structural and economic analysis of the Betamax case and its predecessors. Columbia Law Rev 82:1600–1657.CrossRefGoogle Scholar
  11. Gordon WJ (2002) Excuse and justification in the law of fair use: transaction costs have always been part of the story. J Copyr Soc USA 50:149–198Google Scholar
  12. Gould DM, Gruben WC (1996) The role of intellectual property rights in economic growth. J Dev Econ 48:323–350CrossRefGoogle Scholar
  13. Hertel G, Niedner S, Herrmann S (2003) Motivation of software developers in Open Source projects: an Internet-based survey of contributors to the Linux kernel. Res Policy 32:1159–1177CrossRefGoogle Scholar
  14. Landes WM, Posner RA (1987) Trademark law: an economic perspective. J Law Econ 30:265–309CrossRefGoogle Scholar
  15. Mansfield E (1995) Intellectual property protection, direct investment, and technology transfer: Germany, Japan, and the United States. Washington, DCGoogle Scholar
  16. Matsui K (2015) Problems of defining and validating traditional knowledge: a historical approach. Int Indig Policy J 6:art 2Google Scholar
  17. Pigou AC (1923) The economics of welfare, 3rd edn. Macmillan, LondonGoogle Scholar
  18. Plant A (1934) The economic aspects of copyright in books. Economica 1:167–195CrossRefGoogle Scholar
  19. Reichman JH (2009) Compulsory licensing of patented pharmaceutical inventions: evaluating the options. J Law, Medicine & Ethics 37:247–263Google Scholar
  20. Ritzert M (2009) Champagne is from champagne: an economic justification for extending trademark-level protection to wine-related geographical indicators. AIPLA Q J 37:191–225Google Scholar
  21. Robinson J (1933) The economics of imperfect competition. Macmillan, LondonGoogle Scholar
  22. Samuelson PA (1954) The pure theory of public expenditure. Rev Econ Statistics 36:387–389CrossRefGoogle Scholar
  23. Sidgwick H (1887) The principles of political economy. Macmillan, LondonGoogle Scholar
  24. Sweet CM, Maggio DSE (2015) Do stronger intellectual property rights increase innovation? World Dev 66:665–677CrossRefGoogle Scholar
  25. Walterscheid EC (2000) Defining the patent and copyright term: term limits and the intellectual property clause. J Intellect Prop Law 7:315–394Google Scholar
  26. Yueh LY (2007) Global intellectual property rights and economic growth. Northwest J Technol Intellect Prop 5:436–448Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Centre for Law and Technology, Faculty of LawMultimedia UniversityMelakaMalaysia