Theoretical foundations

Abstract

For more than 150 years, scholars and policymakers have debated whether the patent system increases welfare and innovation (e.g., Plant, 1934; Polanyi, 1944; Penrose, 1951; Machlup, 1958; Nordhaus, 1969; Kitch, 1977; Levin, 1986; Scotchmer, 1991; Scotchmer, 2004; Hall, 2007). More recently, a discussion of patenting activity from the perspective of managers and firms emerged (e.g. Silberston, 1973, Granstrand, 1999, Rivette and Kline, 2000a, b; Reitzig 2004a; Reitzig, 2007; Reitzig and Wagner, 2010a). To establish the theoretical foundations for this book, I provide a brief overview of the most important arguments that form this debate. I begin with traditional views on the patent system. A summary of more recent views and findings follows. I then briefly present current developments in the patent system and discuss different theoretical perspectives on patenting activity.