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CEP discussion paper

Matching Demand and Supply in a Weightless Economy: Market-Driven Creativity With and Without IPRs


Many cultural products have the same nonrival nature as scientific knowledge. They therefore face identical difficulties in creation and dissemination. One traditional view says market failure is endemic: societies tolerate monopolistic inefficiency in intellectual property (IP) protection to incentivize the creation and distribution of intellectual assets. This paper examines that tradeoff in dynamic, representative agent general equilibrium, and characterizes socially efficient creativity. Markets for intellectual assets protected by IP rights can produce too much or too little innovation.


Danny Quah

June 2002     Paper Number CEPDP0534

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