To maximize growth, law and policy should maximize the profitability of innovation. Developing an innovative idea requires combining it with capital (the double-trust dilemma) and labor (the collaborators’ dilemma), which is what business ventures do. To solve these dilemmas, business ventures especially need the legal framework of property, contracts and corporate law. Law and policy for dynamic industries in the United States currently fails to maximize growth because it fails to maximize the profitability of innovation. Intellectual property law balances growth and the loss to consumers from higher prices. Instead, to maximize innovation, intellectual property law should balance higher revenues from monopoly power and higher costs from buying past innovations to develop future innovations.
Robert D. Cooter and Aaron Edlin. "Overtaking" The American Illness: Essays on the Rule of Law. Ed. Frank Buckley. Yale University Press, 2012.
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