Vol ##] THE PROBLEM OF UNIFORMITY COST IL. THE PROBLEM OF UNIFORMITY COST Economic analysts have long recognized that intellectual property rights impose social costs because they interfere with competitive distribution of information goods. But from a dynamic perspective, some distortion must be tolerated as the price to be paid for having information good created in the first place. The social costs that matter, then, are not all static deadweight losses, but only the distortions caused by rights that are more or less robust than necessary to have induced investments in innovation that deliver a net benefit to society. Uniform intellectual property rights necessarily impose such costs. Therefore, Uniform propert policymaking must manage. This section demonstrates this point by revisiting the standard economic justification for intellectual property ights and then by reorienting this analysis around the problem of formity cost This reorientation reveals that the theoretically optimal policy, if intellectual property rights are the only feasible response to derproduction of valuable information, is to fashion perfectly tailored ights rather than to promote perfect price discrimination, as some theorists suggest. While perfect tailoring is just as elusive as perfect price discrimination, the uniformity-cost perspective shows that the focus of policy analysis should be on how intellectual property rights can be rendered more context-sensitive. Further. this theoretical reorientation emphasizes the role of"law"in the law-and-economics of intellectual property because even after economic analysis identifies industries or technologies for which uniformity costs are particularly high, legal scholars must assess whether legal institutions can competently address this problem. Legal analysis demonstrates that while tailoring rights ex ante is an important strategy for reducing uniformity cost, it is not the only one. As is discussed in Section IV, infra, real options and flexible standards also can be used to inject context sensitivity into the application of formally uniform rights 8 See, e.g, WILLIAM M. LANDES RICHARD A POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 74, 310(2003)(discussing social costs of copyright and patent law, respectively) See id See id. at 40(discussing perfect price discrimination)Vol. ##] THE PROBLEM OF UNIFORMITY COST 5 II. THE PROBLEM OF UNIFORMITY COST Economic analysts have long recognized that intellectual property rights impose social costs because they interfere with competitive distribution of information goods.8 But from a dynamic perspective, some distortion must be tolerated as the price to be paid for having the information good created in the first place.9 The social costs that matter, then, are not all static deadweight losses, but only the distortions caused by rights that are more or less robust than necessary to have induced investments in innovation that deliver a net benefit to society. Uniform intellectual property rights necessarily impose such costs. Therefore, uniformity cost is the central problem that intellectual property policymaking must manage. This section demonstrates this point by revisiting the standard economic justification for intellectual property rights and then by reorienting this analysis around the problem of uniformity cost. This reorientation reveals that the theoretically optimal policy, if intellectual property rights are the only feasible response to underproduction of valuable information, is to fashion perfectly tailored rights rather than to promote perfect price discrimination, as some theorists suggest.10 While perfect tailoring is just as elusive as perfect price discrimination, the uniformity-cost perspective shows that the focus of policy analysis should be on how intellectual property rights can be rendered more context-sensitive. Further, this theoretical reorientation emphasizes the role of “law” in the law-and-economics of intellectual property because even after economic analysis identifies industries or technologies for which uniformity costs are particularly high, legal scholars must assess whether legal institutions can competently address this problem. Legal analysis demonstrates that while tailoring rights ex ante is an important strategy for reducing uniformity cost, it is not the only one. As is discussed in Section IV, infra, real options and flexible standards also can be used to inject context sensitivity into the application of formally uniform rights. 8 See, e.g., WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 74, 310 (2003) (discussing social costs of copyright and patent law, respectively). 9 See id. 10 See id. at 40 (discussing perfect price discrimination)