The marginal cost of a good is not usually a relevant factor when crafting intellectual property policy. Marginal costs estimates are based on models of static efficiency, not dynamic efficiency, which is more relevant to policymakers.Profit margins on goods must be high enough to both support...

In 1938, Harold Hotelling argued that the optimum of the general welfare corresponds to the sale of everything at marginal cost and that therefore government revenues should be used to subsidize all industries having large fixed costs. Ronald Coase's 1946 article The Marginal Cost Controversy...

We examine the situation in which firms attempt to fully appropriate returns to their own R&D investment through the intellectual property protection mechanism. To do this, we set up three different games: asymmetric IPP, symmetric IPP, and non-IPP regimes. Each game consists of two stages: each...