Posted by Social Science Research Network
Intellectual Property and Competition – Herbert J. Hovenkamp (University of Iowa)
Abstract: A legal system that relies on private property rights to promote economic development must consider that profits can come from two different sources. First, both competition under constant technology and innovation promote economic growth by granting many of the returns to the successful developer. Competition and innovation both increase output, whether measured by quantity or quality. Second, however, profits can come from practices that reduce output, in some cases by reducing quantity, or in others by reducing innovation.
IP rights and competition policy were traditionally regarded as in conflict. IP rights create monopoly, which was thought to be inimical to competition. By contrast, competition policy values free entry and asset mobility, which IP rights limit in order to create incentives. Today our view of this relationship is more complex. First, most IP rights are insufficient to produce durable monopoly, although they do facilitate product differentiation. Second, we tend to see IP rules as creating a property rights system in which competition exists for the property rights themselves. Firms compete by innovating and appropriating whatever payoffs they are able to capture, including IPRs. Third, we define competition in terms of output or welfare rather than simple rivalry. A market structure or practice that increases output is more “competitive” than a lower output alternative, even though the amount of daily rivalry among firms is less. For example, output in the cellular phone market is much higher because hardware, software, and telecommunications links are all networked by cooperative agreements and standard setting.
Featured News
ConocoPhillips Acquires Marathon Oil for $22.5 Billion in Major Energy Sector Consolidation
May 29, 2024 by
CPI
Judge Denies Amazon’s Bid to Dismiss FTC Lawsuit Over Prime Membership Practices
May 29, 2024 by
CPI
Germany and France Advocate for Major EU Competition Reform
May 29, 2024 by
CPI
Equifax Accused of Monopolizing Employment Verification Market in New Suit
May 29, 2024 by
CPI
Car Battery Makers to Challenge EU Cartel Charges in Brussels
May 29, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Merger Guidelines Retrospective
May 21, 2024 by
CPI
Mergers of Complements
May 21, 2024 by
CPI
Personality Traits, Private Equity, and Merger Analysis
May 21, 2024 by
CPI
The 2023 Merger Guidelines: Lessons in the Importance of Incipiency, Modern Economics, and Monopsony
May 21, 2024 by
CPI
The 2023 Merger Guidelines: Sharpening Merger Analysis
May 21, 2024 by
CPI