From: T0Morrow@aol.com
Date: Tue Dec 22 1998 - 12:29:59 MST
Hal cites Coase's theorem in defense of intellectual property rights. That
theorem states, in brief, that *in a world of zero transaction costs* the
initial allocation of property rights has no effect on the efficiency of
market outcomes. The notion is that parties will costlessly bargain to the
same end-state, regardless.
Of course, no such world exists; bargaining always costs something and
sometimes costs a great deal. That strikes the first blow against using
Coase's theorem as a defense of intellectual property (IP). It costs a
notoriously great deal to define and defend IP rights. Ask any attorney who
has filed for a patent or who has litigated a fair use case under copyright
law. IP has blurry boundaries; lawyers get paid to sharpen them--insofar as
they can. Tangible property has much cleaner boundaries and, hence,
transacting in it costs less.
Furthermore, IP has the distinct disability of rendering the sharp boundaries
of tangible property less sharp. Absent IP, you can fairly well use your
printing press as you see fit. Thanks to copyright, you can not be too sure
about your rights to print. Patent, too, may lead to limits on your use of
printing equipment. But you will in either case have to consult an attorney
to learn more.
Furthermore, as Hal notes, Coase's theorem does not speak to the equities of
allocation. It may in Coase's world be just as efficient to give one man all
the property as it would be to divide it equally, but clearly these represent
different moral cases. Likewise, IP raises serious questions of equity. Even
supposing that we could costlessly define and defend a patent, why should we
allow someone to wield it against an independent inventor, someone who comes
up with a prior-patented idea without copying it? That it infringes on our
rights to our heads, hands, and tools make IP look quite suspect.
[BTW, I should disclose that I have created and now own patents and
copyrights. I regard those forms of IP as suspect, to be sure, but not
entirely unjustified. My apology grows tiresome and complicated, so I set it
aside.]
Hal wrote:
>[O]nce [IP] rights exist, Coase's theorem comes
>into play. The participants will act in such a way as to maximize
>the value of those rights. This will inherently involve finding the
>most efficient and productive ways to use those property rights. And
>everyone benefits from the resulting efficiency.
. . .
>[IP] allows a
>market to exist, prices to be set, and property rights to be exchanged.
>The invisible hand will once again lead to an efficient allocation of
>resources. The market works just as well for intellectual property,
>and other, even more abstract forms of property which we may create in
>the future, as it does for physical goods.
T.0. Morrow
t0morrow@aol.com
http://members.aol.com/t0morrow/T0Mpage.HTML
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