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The New Economy is closely associated with computing & communications technology, notably
the Internet. We discuss property rights to, and trade in, the difficult-to-define intangible assets
increasingly dominating the New Economy, and the possibility of under-investment in these
assets. For a realistic analysis we introduce a Schumpeterian market environment (the
experimentally organized economy). Weak property rights prevail when the rights to access,
use, and trade in intangible assets cannot be fully exercised. The trade-off between the benefits
of open access on the Internet, and the incentive effects of strengthened property rights, depend
both on the particular strategy a firm employs to secure property rights, and the protection
offered by law. Economic property rights can be strengthened if the originator can find
innovative ways to charge for the intangible assets. The extreme complexity of the New
Economy and the large number of possible innovative private contract arrangements make it
more important to facilitate the use and enforcement of private individualized contracts to
protect intellectual property than to rely only on standard mandatory patent and copyright law.
Enabling law is one proposed solution. Current patent legislation in the US has led to costly
litigation processes weakening the position of small firms and individuals in patent disputes.
The property rights of such firms and individuals could be strengthened with insurance or
arbitration procedures.
Key words: Competence bloc theory, Enabling law, Experimentally Organized Economy, New
Economy, Weak property rights, Tradability, Underinvestment. |
This work is licensed under a Creative Commons License.
