Innovation in a competitive marketplace

Target, 1958, oil and collage on canvas by Jasper Johns
Target, 1958, oil and collage on canvas by Jasper Johns

Perfectly Competitive Innovation is a fascinating article on what drives innovation. The authors argue against the notion that patents and copyrights promote innovation. Rather, its a rich competitive environment that drives innovation.

In other words, regardless of copyright law, movies will continue to be produced as long as first run theatrical profits are sufficient to cover production costs; music will continue to be produced as long as profits from live performances are sufficient to cover production costs, books will continue to be produced as long as initial hardcover sales are sufficient to cover production costs, and financial and medical innovations will take place as long as the additional rents accruing to the first comer compensate for the R&D costs.

This sentiment was echoed by MIT Professor Eric von Hippel in a lecture where he discussed innovation occurring in kite surfing where practitioners put their innovations under a creative commons licensing scheme to thwart an attempt by manufacturers to exploit their innovations under traditional intellectual property rights law. Perfectly Competitive Innovation similarly points to many case studies and scenarios demonstrating that innovation does not necessarily need the traditional intellectual property rights rubric to thrive and survive.

Photo credit: cliff1066

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