Challenging Innovation Is Expensive, Imitation Is Cheap, And Exclusion Is Difficult

Title Sums Up Conventional Wisdom

This line taken from the blurb of a recent Mercatus Center (George Mason University) working paper titled “Public Choice and Bloomington School Perspectives On Intellectual Property” published 11/21/2013. this is a 39 pages study, which I do not have the time to read it all.

In the opening of their introduction, the authors present that: “Traditional economic arguments suggest that there is a market failure in the production of new ideas. … As a result, imitators will copy new ideas before innovators have a chance to recoup their sunk costs of development. Foreseeing losses, innovators will be deterred from investment, and innovation will be undersupplied.” (emphasis added)

A Bogus Traditional Justification For Intellectual Property

To be blunt, I think, the argument stinks and is a red herring to distract from well organized, vested rent seekers. In support, the authors write “Almost immediately after the first session of Congress, writers began to petition Congress for protection for their works. … The 1831 [copyright] act doubled protections from 14 to 28 years [from the first copyright act of 1790, thus within 40 years].” (emphasis added).

Here are my challenges to this argument:

1. Without intellectual property protection the costs of new innovation would be significantly lower
2. An ingenious innovator can easily take advantage of imitators and surpass them or move on to other pursuits in which the innovator will easily excel any wannabe imitator
3. Innovation is a race against time. The more innovations, whether by original inventors or by imitators, benefit humanity
4. Exclusion is not difficult, but it is useless and unnecessary

Counterfactuals

How much has innovation in architecture or fashion or visual arts historically been protected? Do we have to assume that e.g. architects or fashion designers are more altruistic than inventors? I might be totally mistaken, but I believe the protections are far lower than those accorded to inventions, music, or literary works.

Previous, Related Blog Posts

The subject of excessive IP protection has occupied my mind for some time. Please see here, here, and here.