Daily Archives: May 15, 2008

Micro-economics and intellectual property markets

I asked my colleague Sebastian Poehlmann, who is an economist, what he thought about this news item.  He made the following comments that I would like to share:

There are many forms of Intellectual Property each having different characteristics and potentials and there are many well-functioning markets where Intellectual Assets are exchanged publicly. Internet forums can be used as a classical example. There is demand for specific solutions or knowledge and there is supply of that knowledge and creativity. The price is non-monetary in most cases (“paying” is usually done by increasing the supplier’s reputation or exchanging favours) but we do also find examples where people pay others to solve their problems.
Other forms of IP, however, that are considered to be more of a defence item and where right-holders face a lot of uncertainty when dealing with their assets (enforceability, value, third-party rights, …), negotiations tend to be done secretly, ensuring that no bit of information is made public before more certainty is reached. To get Intellectual Assets, ideas, we thus still tend to rely on well-established markets, like the labour market, where we “buy” ideas-generating individuals or hire consultants.
Still we find that wherever demand and supply of a (properly-defined) good meet, a price will be found – but it does not necessarily happen in a public market and it is not obvious whether this is good or bad.