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A Cautious Defense of Intellectual Oligopoly With Fringe Competition

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  • Lemley Mark A.

    (Stanford Law School)

Abstract

In a 2008 paper, Michele Boldrin and David Levine offer a strong attack on intellectual property. While Boldrin and Levine make a plausible case, it is an exaggeration to say as they do that patents and copyrights are intellectual monopolies and are not necessary to encourage invention or creation. More significant is their claim that competition, not monopoly, drives innovation. Boldrin and Levine overstate the case for competitive innovation and understate the case for innovation driven by either market power or the prospect of acquiring market power through patent innovation. They are correct that we will get some innovation in many industries, and even the same level of innovation in some industries, without IP protection. But for most types of invention and creation we just can’t be confident that IP isn’t driving at least some innovation. On balance, IP protection will give us more benefit in the industries in which it spurs competitive innovation and fringe competition than the harm it causes in raising prices and constraining downstream innovation. It is, as Mike Scherer puts it, “a system that, despite its manifest imperfections, has worked tolerably well.” Nonetheless, Boldrin and Levine do point the way toward needed reforms of the IP system short of its abolition.

Suggested Citation

  • Lemley Mark A., 2009. "A Cautious Defense of Intellectual Oligopoly With Fringe Competition," Review of Law & Economics, De Gruyter, vol. 5(3), pages 1025-1035, December.
    • Handle: RePEc:bpj:rlecon:v:5:y:2009:i:3:n:3
    DOI: 10.2202/1555-5879.1436
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    References listed on IDEAS

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    1. Boldrin,Michele & Levine,David K., 2010. "Against Intellectual Monopoly," Cambridge Books, Cambridge University Press, number 9780521127264, January.
    2. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    3. James Bessen & Michael J. Meurer, 2008. "Introduction to Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk," Introductory Chapters, in: Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, Princeton University Press.
    4. Mark A Lemley, 2004. "Ex Ante versus Ex Post Justifications for Intellectual Property," Levine's Working Paper Archive 122247000000000492, David K. Levine.
    5. Kitch, Edmund W, 1977. "The Nature and Function of the Patent System," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 265-290, October.
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    Cited by:

    1. Dmitrii Trubnikov, 2017. "Analysing the Impact of Regulation on Disruptive Innovations: The Case of Wireless Technology," Journal of Industry, Competition and Trade, Springer, vol. 17(4), pages 399-420, December.
    2. McManis Charles, 2009. "A Rhetorical Response to Boldrin & Levine: Against Intellectual (Property) Extremism," Review of Law & Economics, De Gruyter, vol. 5(3), pages 1081-1100, December.
    3. Barbosa, Natália & Faria, Ana Paula, 2011. "Innovation across Europe: How important are institutional differences?," Research Policy, Elsevier, vol. 40(9), pages 1157-1169.

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