Patents and incentives to innovate: some theoroetical and empirical economic evidence

In this note, we try to evaluate how effective the patent system is in fostering innovation. We first develop the microeconomic reasoning underlying the legal protection of intellectual property. We then try to assess whether this legal protection does indeed fulfil its mission. We show that due to the difficulty of measuring innovative output, it is hard to reach any conclusive answer. We can at best provide a bundle of partial answers, which cast serious doubts on the necessity to strengthen patent rights, but which provide no argument either for discarding the patent system altogether.