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Tim Wu on IP and how it affects industry structure

I just finished reading Tim Wu’s “Intellectual Property, Innovation, and Decentralized Decisions” essay, which was recently published in Virginia Law Review (but already a while available on SSRN). In his article, Wu makes the point that “we must weigh the benefits of intellectual property assignments, which include subsidizing or making possible desirable economic activity, against the costs of the centralization of economic decisionmaking and the creation of barriers to innovation and market entry,” something to which I wholeheartedly agree.

Wu further argues that the question whether or when to grant intellectual property rights can be reframed as a “choice about the decision architecture for the industry in question.” The nice thing is that this is also perfectly applicable on the DRM problem, which, as you know, has not too much to do with content “protection” but everything with market control. If a company includes DRM in a product, it retains a high level of legal (and temporarily, also technical) control over innovations and competition in the primary and secondary markets surrounding the product.

So, recommended reading.

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  1. […] Nothing especially mind-blowing here, but the “welfare rather than national income” bit is a great starting point for thinking about public domain related issues. Also interesting is the last sentence, in which Pollock connects public domain issues resp. with the open access movement, Redhat like businesses (offering complementary services to a free product), and the argument Tim Wu makes in his “Intellectual Property, Innovation, and Decentralized Decisions” essay (chosaq entry). […]

    » chosaq » Pollock on the value of the public domain on November 8th, 2006 at 18:24