Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 16

The development of an optimal policy for protection of intellectual property requires a careful consideration of the trade-off between creating incentives for the production of such property and the deadweight losses arising from the monopoly that such property rights provide to their owners. In principle, one would imagine that this trade-off would yield different levels of protection for different types of property. That is, patent or copyright protection could vary in duration or could require various types of rights sharing, depending on these relative costs and benefits. For example, some health care advocates argue that drug patents should allow some creation of generics when the primary beneficiaries are residents of low-income countries (this is the case for AIDS-related drugs). Some creative artists argue that copyright protection should be enforced more rigorously, whereas many digital advocates argue against this view. Clearly, reaching a nuanced policy concensus can be very difficult.