Monday, June 13, 2011

Does government protection of intellectual property harm the free market?


By Adam Bitely


Many advocates of free markets believe that a government-run system to protect intellectual property is necessary for free market capitalism to thrive. Contrary to that false belief, when government protects intellectual property using patents and copyrights, monopoly power is granted to the person that is able to purchase such government protections from competition for a fixed period of time.



Having the government protect your idea or product from competition is counter to the ideas of free market capitalism. When competition is prevented, the consumer loses and innovation grinds to a halt. The producer, due to lack of a competitive market, loses all motivation to innovate his or her product. After all, there is no one competing against them, why would they need to update their product?



Many advocates of patents, copyrights, and other protections that are offered by the government argue that such protections are necessary to prevent theft of ideas. Further, these advocates also suggest that without such protections, innovation would grind to a halt. Why? These people believe that without protections, producers would lack the motivation to innovate without protection. According to those who believe this to be true, producers would never invest the time and resources if there were a risk that ideas would be stolen before products make it to market.



However, such advocates of the government providing producers with monopoly powers in the marketplace are misinformed when they assume innovation is halted by a lack of government protections. As it was explained above, innovation is stunted during the period of time that the monopoly exists.



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