
Patents and innovation in economic history [pdf] - gwern
http://www.gwern.net/docs/2016-moser.pdf
======
gumby
TL;DR: politicians and lazy academics typically consider patents to be the
driver of new inventions. Turns out that research doesn't bear that out -- who
knew?! In fact when patent laws are too strong or too broad, development slows
down. Shocker!

(Actually it's good to have someone actually look into the data and challenge
the dominant assumptions. And someone from the existing power structure, like
the NBER in this case.)

~~~
throwawaykf05
That is a rather misleading and incomplete TL;DR. The paper actually
references a number of other papers from the author (Petra Moser) and presents
a number of salient conclusions. Here's one important point: Patents encourage
innovation in industries where other methods of maintaining advantage, such as
secrecy, are not available.

 _> If patents are important in some industries (such as manufacturing
machinery) but not in others (such as scientific instruments or chemicals in
the 19th century), changes in patent laws may influence the direction if not
the level of technical change (Moser 2005). These patterns are borne out in
exhibition data: Countries without patent laws contribute as many exhibits and
prize winners as countries with patent law. But their innovations are
disproportionately focused on industries in which secrecy is effective, so
that inventors are less dependent on patents._

Moser 2005 also points out that as the efficacy of reverse engineering
increased (today you can reverse engineer almost anything pretty cost-
effectively), more exhibitions started to focus on industries with stronger
patent protection.

This is a curious point, however: it almost suggests that the proportion of
innovators in a given population is (was) fixed, and they would innovate where
the promise of rewards is highest.

Another important point: Cheaper patents meant "democratization of invention".
There were more exhibitions with patents from people in rural areas in the US,
where patents were cheaper, compared to UK, where patents were more expensive
and almost all inventors were based in London.

One problem with this paper is that it makes broad generalizations based on
narrow data: The fact that plant patents didn't increase the number of new
rose varieties registered gets the headline "Intellectual Property Rights for
Living Organisms Have Not Encouraged Innovation". It draws conclusions about
innovation based on exhibit data where, by the author's own admission (Moser
2005), exhibitions may have significantly discouraged the inclusion of
exhibits that were easy to copy.

Also, it's important to look through the other cited studies, because they
almost always present data that is different from other papers. Some data can
be more compelling than others.

Nonetheless Moser provides a fascinating view into how innovation may be
influenced by incentives and policies.

~~~
jb613
> "This is a curious point, however: it almost suggests that the proportion of
> innovators in a given population is (was) fixed, and they would innovate
> where the promise of rewards is highest."

True but I'll add that often for individuals to quit their jobs and focus on
innovating requires more than just "the promise of rewards". Immediate funding
often trumps the promise - and that funding comes from some kind of investor.
Many investors view patents as: 1) a way to recoup at least some their
investment dollars if the innovator can't monetize, 2) prevent competitors
from simply copying the results of the R&D.

------
jacobolus
I wonder if there have been any attempts to quantify the economic fruits of
government-funded research, e.g. by ARPA (especially before being limited to
narrowly defense-related projects) or NSF, or research directly undertaken by
executive agencies like NASA, etc.

Government-sponsored basic research and scholarship often comes under fire
from asshole lawmakers claiming to have the interests of “taxpayers” in mind
(cf. e.g.
[https://en.wikipedia.org/wiki/Golden_Fleece_Award](https://en.wikipedia.org/wiki/Golden_Fleece_Award),
or more recently [https://www.congress.gov/bill/114th-congress/house-
bill/3293...](https://www.congress.gov/bill/114th-congress/house-
bill/3293/text)), but as far as I can tell, such research has been one of the
primary drivers of “innovation” and economic growth in the US over the past
70+ years.

~~~
dnautics
Thats the fallacy of the seen: You don't know what would have been discovered
otherwise. Non-government funded discoveries include salk and Sabin polio
vaccines and the chemiosmotic effect.

~~~
AnthonyMouse
Discovered in what otherwise?

It's not like public research funding comes at the expense of private
research. Public research funding allows there to be a higher total number of
scientists doing research than there would be, all else equal, without it.

And there are clearly things patents don't provide the right incentives for.
Anything that benefits all of humanity is very difficult to recover the value
of as a patent because engaging in licensing transactions with every single
person everywhere is prohibitively expensive. And then the license fees
artificially reduce adoption of the invention until the patent expires due to
supply and demand (price goes up, demand goes down), making it _even harder_
to recover the full value of the invention. Which would imply that patents
necessarily result in under-investment in research.

~~~
jb613
> "Anything that benefits all of humanity is very difficult to recover the
> value of as a patent because engaging in licensing transactions"

"Anything that benefits all of humanity" should be recognized as inherently
valuable to fund and therefore would be useful to look at reducing the costs
of "engaging in licensing transactions". In other words, society may benefit
by making it easier (or less costly) for the researcher or innovator to be
rewarded - thereby increasing the incentive to create something to benefit
humanity.

~~~
AnthonyMouse
What are you actually proposing? Some abstract means of reducing licensing
transaction costs? How?

------
quadrangle
This seems not to reference one of the strongest and most thorough recent
reviews of this whole topic, "The Case Against Patents":
[https://www.aeaweb.org/articles.php?doi=10.1257/jep.27.1.3](https://www.aeaweb.org/articles.php?doi=10.1257/jep.27.1.3)

