The Economics of Intellectual Property in a World without Frontiers: A Study of Computer Software.

• Author: Windsor, Duane

Intellectual property is a proprietary idea that once marketed through a physical embodiment such as a book, computer code, Musical Score, or software package becomes a public good unless there is effective property rights enforce' nt. The principal methods for intellectual property protection are patents, copyrights, trademarks, and trade secrets [p. 17]. The copyright approach is the subject of this book. "The principal objective of this work is to explore the problems arising from dynamic information technology ( . . . IT) in its application to intellectual' property rights" [p. 11 in a globally integrated economy functioning without effective legal boundaries. The book examines the economic, legal, and international aspects of these problems. IT proliferates intangible commodities [p. 103] in the form of readily accessed algorithms and software. There are no effective international guidelines regulating piracy of information.

The author, who has published three previous books concerning global information technology and telecommunications, concludes that free flow of information in "a global marketplace of ideas" [p. 1] will yield strong benefits to a world without frontiers. The book argues for economic efficiency and economic growth through competitive markets. Copyright monopolies tend to stifle both competition and technological progress. "The economic welfare aspects of copyright legislation, enforcement, and monitoring do not justify the heavy costs, especially for the application of copyright laws across national borders" [p. 113]. The author suggests the use of lump-sum fees (licensing and/or government payments) to intellectual property owners as a replacement for poorly functioning market, copyright, and civil suit arrangements. ". . . IT is making it impossible to monitor and restrict the flow of information because the information eludes the regular channels of control. This is particularly true of computer software" [p. 114]. The current situation is one of "near futility of monitoring and enforcing protection of intellectual property" [p. 2]. Low-cost access creates a "free rider" problem of joint consumption and nonexcludability that "render the markets for intellectual property less efficient than markets for private goods" [p. 22]. Intellectual property is a public good, but for market distribution it is embodied in a physical from conveying private property rights but readily pirated with the increasingly widespread...