Introduction

Abstract

Patents are regarded as a key policy instrument to spur innovation and technological progress, based on the social bargain that inventors disclose their novel and nonobvious invention to the public in return for temporary exclusion rights to use the invention. The artificial market power a patent confers upon the inventor with inevitable loss of public welfare represents a fundamental market intervention of the state. Not surprisingly, since the beginning of modern economic thought, scholars have therefore been pondering over the costs and benefits of patents to society.