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Trading in Information: On the Unlikely Correspondence Between Patents and Blackmail Law

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  • Thomas J. Miceli

    (University of Connecticut)

Abstract

This paper studies the problem of trading in information in two seemingly unrelated settings: inventive activity; and blackmail. In the former, a discoverer of some new information wishes to profit from it but may be deterred because the act of disclosure effectively makes the information public. Thus, legal protection of the information in the form of a patent is usually needed to allow the inventive process to proceed. Blackmail also involves trading in information; but because the transaction is between two parties who already know its content—the discoverer, and someone who wishes to keep it hidden—the appropriability problem is absent. The paradox of blackmail is why the blackmailer prefers to sell the information to the informed party rather than to the uninformed party (who actually values it more); this latter transaction would be legal. The resolution of the paradox provides the link to patent law, because the latter transaction does involve the appropriability problem.

Suggested Citation

  • Thomas J. Miceli, 2020. "Trading in Information: On the Unlikely Correspondence Between Patents and Blackmail Law," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 637-650, June.
    • Handle: RePEc:kap:revind:v:56:y:2020:i:4:d:10.1007_s11151-020-09749-z
    DOI: 10.1007/s11151-020-09749-z
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    References listed on IDEAS

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    Cited by:

    1. Roger D. Blair, 2020. "The Intellectual Property-Antitrust Interface," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 557-561, June.
    2. Thomas J. Miceli, 2021. "Reconciling blackmail and nondisclosure agreements: An economic approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 268-274, March.

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    More about this item

    Keywords

    Adverse selection; Appropriability problem; Blackmail; Patents;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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