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A Patent and a Prize

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  • Hylton Keith N.

    (Boston University and Boston University School of Law, Boston, USA)

Abstract

This paper examines a simple and old question: should innovators receive a patent or a prize? The answer I provide is equally simple: they should receive both. The literature on patents versus prizes has proceeded mostly under the assumption that there should be a choice between a regime of patents and a regime of prizes in which patents fall into the public domain upon award of the prize. There are significant “public choice costs” under the prize plans. By this I mean there are risks of inappropriate transfers to patentees – that is, looting – and of confiscation of patentees, through the conduct of or through the omissions of government agents. The innovation regime I propose is a patent-plus-prize scheme. The patentee would receive the patent and a prize that approximates consumer surplus. Public choice costs are considerably lower than under prize schemes: there would be no looting and no risk of confiscation under patent-plus-prize. In addition, private and social incentives to innovate are aligned.

Suggested Citation

  • Hylton Keith N., 2024. "A Patent and a Prize," Review of Law & Economics, De Gruyter, vol. 20(3), pages 413-438.
    • Handle: RePEc:bpj:rlecon:v:20:y:2024:i:3:p:413-438:n:1004
    DOI: 10.1515/rle-2024-0096
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    More about this item

    Keywords

    patents; patent prizes; innovation; monopoly; public choice;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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