Machlup & Penrose 1950

The famous economists Fritz Machlup and Edith E.T. Penrose wrote an article in 1950 titled 'The Patent Controversy in the Nineteenth Century' (published in volume 10 of the Journal of Economic History 1950, p. 1-29.)

Besides discussing the topic mentioned in the title, this article also explains in a very eloquent way why all four justification theories usually given for patent law are incorrect:

  • Property theory (a.k.a. natural law theory): by emphasizing the actually non-existent similarity between real property and intellectual property, the propagandists of this theory make the false suggestion that intellectual property should also be considered as a holy and inviolable right - as real property is considered since the French revolution. But this comparison is outright wrong, both from a legal and an economic perspective, of only frm the simple fact that real property is essentially unlimited in time, while patents and copyright are limited in time.
  • Incentive theory:
  • Reward theory:
  • Contract theory (a.k.a. 'quid pro quo' theory):

The 29 paged article is in clear language and recommended reading. It can be found here or cached here.

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