Inventors and Pirates: Creative Activity and Intellectual Property Rights
NBER Working Paper No. 7898
This paper analyzes how both the value of ideas created as well as the security of intellectual property rights result from the choices of potentially creative people either to engage in creative activity or to be pirates, and from decisions of people who are engaged in creative activity to allocate time and effort to the guarding of ideas from pirating. An important result is that, although the existence of a small number of geniuses causes a larger fraction of potentially creative people to choose to be pirates and, consequently, makes intellectual property rights less secure, the existence of a small number of geniuses, holding fixed the average level of talent, can result in a larger value of ideas being created. The paper also recognizes the difference between the private value and the social value of the security of intellectual property rights.
Published: Grossman, Herschel I. "Inventors And Pirates: Creative Activity And Intellectual Property Rights," European Journal of Political Economy, v21(2,Jun), 2005, 269-285.