Question

What are the best arguments for awarding a "property right" specifically a patent, to the discoverer of any new and useful idea? Please state clearly atleast one objection to allowing ideas to be privately owned. And also is there an alternative government policy to encourage innovation that avoids the stated problem? Which is superior, from a law and economics perspective - the patent/property right solution or your alternative?

Please explain in detail.

Answer 1

Awarding a property right or a patent to an idea is done to promote more research and development in that particular field and reward the person or company which has spent a considerable amount of its own resources in the manufacturing of the new product or the idea. Example for such patents are the exclusive rights given to the medicine manufacturing companies for their products.

A problem form this property right or patent is that it creates a monopoly in the market and increases the exploitation of the consumer. After having a patent right a single company becomes the owner of that product and they sell the product at a very high price and consumers didn't have any substitute to the product are forced to pay the extra price.

An alternative to this is publicly funded research. It will distribute the cost of research and development on a much larger population and the amount paid by the population in form of taxes will be very less as compared to a single consumer paying the high cost. A public funded research will be available to all and people can improvise on the new technology and improve it easily too which will again benefit the whole population.

The alternative of public funded research is better.