Monday, April 27, 2015
One of the coolest parts of the Pogge piece for me is his demonstration that intellectual property is the creation of a market failure, a monopoly, to correct for an even bigger market failure. In a pure market if you research and develop some product, I will simply copy it and sell it for far less money (since I didn't have to sink all of that money into R&D). As a result, it is irrational to invest in R&D -- a SPECTACULAR market failure. What is the solution? The creation of monopolies! That, after all, is what intellectual property is, a monopoly that is conferred by the state in certain circumstances for a certain period of time. Monopolies are, as economists never tire of telling us, extremely inefficient, but in this case the thought is that they are less inefficient than the pure market wold be -- the lesser of two market failures, in effect. It becomes clear once the problem is framed this way what the economic bar will be. Any proposal that is less inefficient than the current monopolies created under the TRIPS regime will be economically preferable to TRIPS and to a pure market. It will be messing with the pure market, but intellectual property is already messing with the pure market because the pure market fails so spectacularly to support efficient levels of research and development. So cool!
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