Reply To: Proprietary vs. Open Source


The effect Intellectual Property has on the overall extent of invention and innovation is unclear. What we can conclude from economic theory is that the composition of invention and innovation will be different in a world with IP compared to one without IP.

In a world without IP, the monetary gain from invention and innovation will accrue to entrepreneurship instead of being imputed to patented machines or copyrighted works. Inventors and innovators earn profit from their creativity in the period before other entrepreneurs enter the field and to the extent that they cater their products to satisfy consumer preferences more fully than those of other entrepreneurs.

In a world with IP, the monetary gain from inventions and innovations will accrue to the goods receiving IP protection. But this extra monetary value will not stimulate production of the same goods by other entrepreneurs, since IP makes doing so a crime, but on alternative inventions and innovations that do not violate IP but produce similar goods that attempt to satisfy the same consumer preferences.

You might take a look at the Mises Institute wiki on IP: