[Patents] Machlup on Knowledge Economics

[phm@a2e.de (PILCH Hartmut)]

A new summary, soon to be filled with some quotations from one of the most
competent critics of the "patent faith".

http://swpat.ffii.org/vreji/papri/machlup62/

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 Fritz Machlup: The Production and Distribution of Knowledge in the United
                                   States

    A classic of the economics of knowledge, and in many ways the first
    book of its kind, written by a famous American economist of Austrian
     origin, whose earlier analysis of patent economics is cited in all
   relevant economics textbooks. Machlup observes that "the production of
     knowledge yields social benefits in excess of the private benefits
     accruing to the recipients of knowledge", that "the production of
   certain kinds of knowledge is limited by inelasticities in the supply
   of qualified labor" and that ordinary wisdom of market economics often
      doesn't work in the area of knowledge production, which is both
     crucial for overall economic growth and welfare and managed in an
    inappropriate and wasteful way, which is why Machlup found that his
   study was overdue. This book contains a long chapter titled "Inventive
     Effort and Patent Protection" which argues that patents in general
   fail to achieve their stated goal of promoting innovation. While most
    patents are held by large corporations, it is precisely these large
    corporations that least depend on patents for the financing of their
      R&D efforts. In fact the economics of oligopolistic competition
   determines that large corporations must spend considerable efforts to
   stay ahead of their competitors on R&D, no matter whether this results
      in a 20 year patent monopoly or not. The economics of knowledge
   determine that the diffusion of knowhow to competitors is usually slow
     enough to allow advantages gained by R&D to yield enough returns.
     Having patents however means that companies have to spend half of
        their R&D budget on managing their patenting efforts and the
    associated litigation. In other chapters of the book Machlup points
     out the limits of industrial research and explains that the above
        stated "inelasticity in the supply of qualified researchers"
     determines that research ressources generate the greatest overall
         wealth for the national economy when they are utilised in
     public-financed institutions where basic research is combined with
                                 teaching.


   title:
          Fritz Machlup: The Production and Distribution of Knowledge in
          the United States

   source:
          Princeton University Press 1962 /bib: stabi 36612159710010

   see [103]Fritz Machlup: The economic foundations of patent law
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 103. http://www.ipmall.fplc.edu/ipcourses/jepson/unit1/aneconom.htm