The Economics of Innovation and Intellectual Property

Abstract This work is an upper-division and master’s-level text covering the economics of innovation and the ways in which it is encouraged or discouraged by intellectual property (IP) protection. The first part of the book covers the basic features of invention, innovation, diffusion, and the various IP instruments; the contribution of these to firm profits and growth; and the policies that governments use to encourage innovative activity. Part II gives more detailed information on IP rights: patents, copyright, trademarks, and the various alternatives to formal IP. Part III covers several IP (mostly patent) topics in greater detail, looking at specific sectors such as software, including artificial intelligence, and pharmaceuticals, as well as the use of IP in developing countries. It also goes into detail on topics of strategic interest to firms: patent litigation, technology standards and patents, the sharing and exchange of patents, and the strategic use of patents in general. The book’s approach is largely verbal and example-driven, but with simple mathematical models that introduce the reader to the more advanced economics literature in this area and equip them to delve further if they so wish. There is a brief mathematical appendix (Appendix A) containing material that may be unfamiliar to the reader as well as appendices containing the many abbreviations used (B) and an introduction to the data now available for studying the economics of innovation (C). The Bibliography section is large and can serve as a useful compendium of the literature in this area.