Re: Where would we be without these important patents?

On Mon, 20 Mar 2006 02:41:12 -0000, "Andy F." <never.mind@xxxxxxxxx>
wrote:

"sinister" <sinister@xxxxxxxxxxxxxx> wrote in message
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"Andy F." <never.mind@xxxxxxxxx> wrote in message
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<royls@xxxxxxxxx> wrote in message
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What economic theory does predict is that
granting monopoly privileges is one of the least efficient ways to
provide an incentive.

You're obviously quite ignorant about economic theory.

Please provide a substantive rebuttal to the claim "What economic theory
does predict is that granting monopoly privileges is one of the least
efficient ways to provide an incentive."

That statement implies that there's a more efficient system that could be
used.

Correct. Which there is.

So what are the alternatives?

You obviously don't know, and will now proceed not to enumerate them:

One alternative would be to have a free market and no patents, so that any
invention would immediately become public domain.The problem with this is
you could get a market failure due to externalities. An invention would
benefit the whole community, but there would be no way to make everyone pay
for it.So a beneficial invention might not get made because it wouldn't be
in the inventor's interest to develop it.

Same argument applies to scientific research that is not covered by IP
law (i.e., almost all of it). Yet we don't seem to have any crying
lack of it, and no one is stupid and evil enough to suggest
monopolizing published research results as private property.

Another way would be to have research funded by the government.This could
avoid the market failure, but would depend on public officials deciding
where to invest the money.Since the officials almost certainly wouldn't have
enough information or incentive to do this efficiently, there would probably
be a misallocation of resources.

But almost certainly a far more efficient allocation overall than the
system of monopoly IP privileges yields, as billions would not be
spent uselessly on rent seeking, patent lawyers etc.

The third option is patents.It's true that patents are monopolies and thus
aren't perfectly efficient.

They are in point of fact known to be very _in_efficient. The _only_
reason monopoly privileges were _ever_ implemented as an incentive for
invention was because the system was simple and had been used for
centuries to distribute political favors without expending cash (the
royal patent monopolies on land parcels, trade in commodities like
salt and spices, etc.). It is known that these patent privileges were
in fact far more costly to society than just giving the equivalent in
cash to their owners.

However, neither are the alternatives.Unless you
can show that the static efficiency loss due to patent monopolies is greater
than the losses due to a lack of technological advance or to bureaucratic
inefficiency, then you can't really claim that patents are inefficient.

Garbage. It is known that cash payments are more efficient incentives
than monopolies. In addition, you have completely ignored (surprise!)
some extremely efficient -- and _proven_ efficient -- alternatives:

1. The system of scholarly priority used for scientific research has
been proved extremely effective in stimulating both research and
publication, and is virtually cost-free to society. No one has ever
advanced any credible argument that a similar system would not work
just as well for inventions.

2. The system of publicly offering cash prizes for solutions to
difficult technical problems has proven to be vastly more efficient
than the patent system, and far more effective at stimulating research
expenditures. Patents never solved the problem of human-powered
flight even after centuries of development. The Kremer Prize did it
in less than 20 years. The X Prize, the DARPA Grand Challenge, the
Ing Prize: there are many, many examples where the prize money offered
has been dwarfed by the research and development expenditures it has
stimulated.

3. A system of public funds distributed not by the discretion of
appointed officials but by an objective allocation system based on
product revenues, voting by industry, academe and the public, and/or
any number of other transparent mechanisms would almost certainly
provide a very efficient allocation of incentives, far more efficient
than patents. Prizes for desired inventions could be established by
similar mechanisms as post hoc rewards for unanticipated inventions.

All three of these would be more efficient than patents, and would not
violate anyone's rights (except, in the case of government money, to
the extent that the tax system violated their rights, but that's a
separate issue). More possibilities could be developed. The key
point, though, is to be willing to know the fact that you don't
stimulate progress and excellence by giving rents for them after the
fact. You do it by establishing _meaningful_competition_ from the
outset. The old Soviet Union dominated the Olympic medal standings
not because its athletes got more product endorsement rent incomes
after winning medals than American athletes, but because the Soviet
government knew what it wanted, and paid to get it.

-- Roy L
.