Economics 401 homework assignment, spring 2010

In class, we briefly discussed the policy tradeoffs of patents and copyrights. Economists universally acknowledge that patents and copyrights encourage innovation, while discouraging competition, and that the former effect is good and the latter bad.

However, economists differ as to how to weight the good and the bad in this tradeoff. Some economists go so far as to argue that the effect of patents and copyrights is almost entirely bad. For the most notables example I'm aware of of this argument, see Against Intellectual Monopoly by David Levine (available for free online).

Your assignment is to read as much of the Levine book and other sources as is necessary and write a short paper which addresses the following points:
  1. What is the basic argument that the good caused by patents is small in comparison to the harm they cause?
  2. Give several examples of useful inventions or innovative work that were developed without the protection of a patent system.
  3. Give several examples of innovation being hindered due to the patent system, according to Levine.
  4. New drugs are often cited as the most compelling example of a good for which patent protection is necessary. What does Levine think about this, and do you agree or disagree with him?
  5. Why does Levine think such a harmful patent system came to exist in the first place?
  6. What is one specific reform Levine suggests (other than the obvious elimination of the patent system), and what is the argument he gives for why it is worth doing?

Your write-up should be typed, of sufficient length to address the 6 points above, but not more than 4 pages. You do not need to read the entire Levine book, nor even a significant fraction of it, but your paper is likely to be much more convincing and thus receive a much higher score if you do carefully examine the relevant sections.

You paper will be worth 15% of your course grade (there will be no other graded HW assignments this semester), and is due Friday, April 30 by 3pm. Late papers will be accepted, but there will be a 20 percentage point penalty for each day the paper is turned in late, so papers at least 5 days late will automatically get a 0. Papers should be emailed to me at by 3pm on 4/30/2010.