Intellectual Property Rights and Market Dynamics

The modern economy is currently characterized by some emerging phenomena related to the protection of intellectual property. First, technologies are increasingly bought and sold in the market, mostly in sectors in which patent protection is relevant and strong enough. Second, the open science model is more and more diffused in the technology development process of business sectors like (open source) software. Third, scientific discoveries of academic researchers, traditionally diffused in an open science system, are increasingly protected through intellectual property rights and specifically patents. These phenomena highlight that two contrasting models, that is, the strong intellectual property rights (IPR) model, and the open science model, are currently diffusing in the technological and economic environment, and shaping in opposite ways the behaviour of different institutional agents and organizations. These two models have been analysed in the economic and policy literature. They have traditionally been applied to alternative institutional contexts. The strong IPR model has been associated with the business environment, while the open science model has been associated with the academic or research system. Nevertheless, more recently, a strengthening of the IPR system has occurred in the public research system, and open science models have been adopted in private sectors like the open source software. This chapter discusses these different models of intellectual property protection and their implications for the innovative activity of firms and economies and the market dynamics. The IPR and the open science models present advantages and drawbacks in terms of incentives to innovate, adoption of technological innovations, and diffusion of technologies in different institutions (large and small firms, public research institutions) and different sectors. This chapter identifies several policy issues related to the conditions under which the two models can be sustainable and beneficial for the economy.