AltInst: Patent Buyouts

Quarterly Journal of Economics, Nov. 1998, pp. 1137-1167.

  Patent Buyouts: A Mechanism for Encouraging Innovations
                 by Michael Kremer

In 1839 the French government purchased the Daguerreotype
patent and placed it in the public domian. Such patent buyouts
could potentially eliminate the monopoly price distortions and
incentives for rent-stealing duplicative research created by
patents, while increasing incentives for original research.
Governments could offer to purchase patents at their estimated
private value, as determined in an auction, times a markup
equal to the typical ratio of inventions' social and private
value. Most patents purchased would be placed in the public
domain, but to induce bidders to reveal their valuations, a few
would be sold to the highest bidder.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar FAX: 510-643-8614
140 Warren Hall, UC Berkeley, CA 94720-7360 510-643-1884

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Received on Fri Jan 15 16:31:15 1999