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Regulation And The Marginalist Revolution, Herbert J. Hovenkamp
Regulation And The Marginalist Revolution, Herbert J. Hovenkamp
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The marginalist revolution in economics became the foundation for the modern regulatory State with its “mixed” economy. Marginalism, whose development defines the boundary between classical political economy and neoclassical economics, completely overturned economists’ theory of value. It developed in the late nineteenth century in England, the Continent and the United States. For the classical political economists, value was a function of past averages. One good example is the wage-fund theory, which saw the optimal rate of wages as a function of the firm’s ability to save from previous profits. Another is the theory of corporate finance, which assessed a corporation’s …
Intellectual Property And Competition, Herbert J. Hovenkamp
Intellectual Property And Competition, Herbert J. Hovenkamp
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A legal system that relies on private property rights to promote economic development must consider that profits can come from two different sources. First, both competition under constant technology and innovation promote economic growth by granting many of the returns to the successful developer. Competition and innovation both increase output, whether measured by quantity or quality. Second, however, profits can come from practices that reduce output, in some cases by reducing quantity, or in others by reducing innovation.
IP rights and competition policy were traditionally regarded as in conflict. IP rights create monopoly, which was thought to be inimical to …