Inventors and pirates: Creative activity and intellectual property rights

This paper analyzes a model in which creative activity and the security of intellectual property rights are jointly determined, both depending on the choices made by potentially creative people either to engage in creative activity or to be pirates of the ideas created by others and on the decisions made by people who are engaged in creative activity to allocate resources to guarding the ideas that they create from pirating. The exogenous variables in this model are the environment for pirating, which includes the legal system, and the interpersonal distribution of talent. Among other results, the analysis shows that, holding Þxed the average level of talent, the existence of geniuses makes intellectual property rights less secure, but also can result in a larger saleable value of ideas being created. The analysis also shows that intellectual property rights probably are too secure, in that the amount of time and effort allocated to guarding ideas from pirating probably is larger than the amount that would maximize the net saleable value of ideas created.