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• W3124941437 abstract "INTRODUCTION Wendy Gordon has noted that of IP is concerned with internalizing positive externalities. (1) In two recent articles, Spillovers (2) (with Mark Lemley) and Evaluating Demsetzian Trend in Copyright Law, (3) I challenge conventional economic theory of intellectual property and specifically idea that society ought to use intellectual property systems to internalize when feasible. The nature of challenge--or spillovers theory--can be viewed in two ways. I would frame challenge as an internal one based on, and consistent with, welfare economics. In his reply to latter article, economist Harold Demsetz seems to accept this view while critiquing aspects of analysis. (4) Others, such as economist Anne Barron, have critiqued articles, suggesting that spillovers theory is inconsistent with welfare economics, necessarily relies on some other noneconomic social theory yet to be specified, and thus is truly an external challenge to conventional economic theories of IP. (5) What is interesting about these responses is how they frame a boundary dispute between economic and other social theories of intellectual property. That such a boundary exists is well understood. (6) What seems worth exploring, for purposes of this Article, is how we arrive at and frame contours of boundary through a discussion of spillovers. Claims about what lies on one side or other of boundary may turn on assumptions and beliefs that might not hold up on close inspection. For example, consider reason why Julie Cohen believes spillover theory is unlikely to be valued by economics: The spillovers argument, however, provides no determinate standard.... In real world, this objection should not be fatal; indeterminacy does not rule out pragmatic policymaking. Within epistemological confines of economic analysis of law, however, generalized reliance on externalities tends to be perceived as signaling a lack of analytical rigor. The problem, in other words, is not argument itself, but rather these theorists' inability to provide an answer in terms that their discipline values most highly. (7) Not surprisingly, I disagree with her view of the epistemological confines of economic analysis of law and perceived need for determinacy. (8) Our disagreement rests, I think, on a version or offshoot of boundary highlighted above. Determinacy is a requirement imposed by exigencies of policy making or decision making more generally, but it is not an epistemological requirement imposed by economics or economic analysis of law. If one employs economic (or any other) methodologies to resolve or guide decision making through, for example, cost-benefit analysis, then one inevitably faces difficult questions about what costs and benefits count. As described below, spillovers theory raises these questions along boundary noted above. In this Article, I reengage this debate and critiques I have mentioned, and explore boundary between economic and other social theories of intellectual property. I begin with a brief discussion of conventional economic theories of intellectual property. Next, I discuss spillovers theory and various critiques, and reflect on a number of conceptual boundaries that surface in this discussion. I. A BRIEF DESCRIPTION OF THE CONVENTIONAL ECONOMIC THEORY OF INTELLECTUAL PROPERTY The basic economic justification for intellectual property rights is that exclusive rights provide necessary incentives for private investment in creating intellectual resources. (9) Information resources face a well-known supply-side problem common to public goods (10): inability to cheaply exclude competitors and nonpaying consumers (free riders) presents a risk to investors perceived ex ante (prior to production), and this risk may lead to undersupply. …" @default.
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• W3124941437 date "2009-11-01" @default.
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• W3124941437 title "Spillovers Theory and Its Conceptual Boundaries" @default.
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