Law Commons^™

The Debilitating Effect Of Exclusive Rights: Patents And Productive Inefficiency, William Hubbard

All Faculty Scholarship

Are we underestimating the costs of patent protection? Scholars have long recognized that patent law is a double-edged sword. While patents promote innovation, they also limit the number of people who can benefit from new inventions. In the past, policy makers striving to balance the costs and benefits of patents have analyzed patent law through the lens of traditional, neoclassical economics. This Article argues that this approach is fundamentally flawed because traditional economics rely on an inaccurate oversimplification: that individuals and firms always maximize profits. In actuality, so-called "productive inefficiencies" often prevent profit maximization. For example, cognitive biases, bounded rationality, …