What is the Right Incentive to Create IP? It depends on the value produced by the IP Patent and copyright provide an automatic solution to the problem of setting the reward since How much people will pay you to use it evidence of its value But there are costs to rewarding innovation in that way The deadweight cost of monopoly pricing The transaction costs of treating ideas as property rather than commons It also depends on how long before someone else would produce the same IP Why not permanent copyright protection,since nobody else would ever write my book? There is a tradeoff between a little more incentive and the dead weight cost of monopoly So patent term should be shorter than"set reward equal to value produced"impliesWhat is the Right Incentive to Create IP? • It depends on the value produced by the IP • Patent and copyright provide an automatic solution to the problem of setting the reward since • How much people will pay you to use it evidence of its value • But there are costs to rewarding innovation in that way • The deadweight cost of monopoly pricing • The transaction costs of treating ideas as property rather than commons • It also depends on how long before someone else would produce the same IP • Why not permanent copyright protection, since nobody else would ever write my book? • There is a tradeoff between a little more incentive and the dead weight cost of monopoly • So patent term should be shorter than “set reward equal to value produced” implies