Yet Another Study Shows How Patents Create Suboptimal Innovation
from the add-it-to-the-pile dept
Over the years we’ve covered numerous different economics studies that have shown how damaging patents are. Most of them have looked at the historical evidence, comparing different societies (one with patent protection and one without, or with weak, protections) at the same time, or comparing what happens right before and right after changes are made to patent law in terms of innovation. The vast majority of the evidence shows that patents create suboptimal results — often slowing down the pace of innovation. They’re usually used not to encourage new innovations but to allow companies to stop competition, and thus slow down the pace of innovation. I’ve been meaning to put together a comprehensive list of the research, and I hope to get to that soon.
However, now there’s a new study to add to the list — and this one is based not on the historical evidence, but trying to model different methods of rewards for innovatively solving a complex problem. And, once again, the study found that a free market solution greatly outperforms a patent monopoly solution where the “first” provider gets a monopoly. The research was led by economist Peter Bossaerts and a team of others — and it made a point that won’t surprise anyone who’s studied the economics of monopolies. Patents tend to function just like any other monopoly system: it shrinks the overall market, decreases net social benefit, provides monstrously excess rewards to a single provider and harms everyone else. In fact, the research found that the patent system created a massive disincentive for many people to participate in the very process, even if their contributions could have been quite helpful in speeding along the innovation.
It’s just one study, and the experiment is a bit simplistic — but hopefully others will build on this research to create more complex models as well. In the meantime, though, it’s yet another bit of evidence to throw onto the large and growing pile of studies showing how damaging patents can be. And, given how so many of them seem to approach the question from a different angle and still all come to the same or similar results… at some point you have to wonder why no one creating policy ever looks at this mountain of evidence.