COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 241 The Optimal Life of a Patent William D. Nordhaus November 1967 One of the important peculiarities of information is that it is expensive to produce but cheap to reproduce. How does a price system react to this phenomenon? One reaction will be to avoid the production of information altogether. Alternatively, firms may decide to keep their information to themselves. In other cases the price system breaks down into imperfect competition. All three of these laissez-faire reactions are inefficient and it may be argued that it is desirable to impose social controls like a patent system or government control on the market for information. In the present paper we discuss some economic aspects of a patent system. |
