Definition
Economic justification for intellectual property means the economic reason for establishing and supporting a system of intellectual property laws. It begins with the characteristics of information as public goods (Arrow 1962): non-rivalry in consumption and non-excludability. Intellectual property rights confer upon the right holders an exclusive right to legally compel users to buy a genuine product from the right holders or to obtain a license from them. Intellectual property rights are to prevent a market failure due to free-riding activities of non-payers. In general, intellectual property rights can be grouped into two families according to the function of the information therein: information as a good and information as a signal. Examples of intellectual property rights in the form of information as a good are copyright, patents, industrial designs, layout-designs of integrated circuits, and confidential information, while examples of intellectual proprietary rights...
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Khong, D.W.K. (2019). Intellectual Property: Economic Justification. In: Marciano, A., Ramello, G.B. (eds) Encyclopedia of Law and Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7753-2_697
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