Proof IP laws don’t increase innovation

The main critique of abolishing IP laws is the reduced innovation, so let’s get into it.

So first off, without IP there would still be at least some innovation due to first mover advantage and reputation based donating and crowdfunding, now this will not create as much innovation initially as with IP laws. Which brings me to my second point, having a bigger reward for your innovating will make you want to innovate more, therefore innovation will be increased initially due to IP.

How a bigger reward makes people work harder. Credit: ChatGPT

However, the aforementioned “reward” is the ability to relax and not innovate later on, which will last until the patent expires. The innovation when the patent is held will be less than the baseline/no-IP innovation due to the patent monopoly.

So we establish that with IP:

• Before patent is granted – innovation is increased compared to no IP
• After patent is granted and before expiry – innovation is decreased compared to no IP

Which brings me to this graph I quickly threw together:

Average Innovation Over Time Per Invention

It’s not based on data, just a thought experiment, it shows a hypothetical average innovation on inventions.

You might examine this graph and ask me, why do these lines seem to cancel out, how are you so sure it’s net zero?

My hypothesis is that you cannot create innovation out of thin air, and thus all innovation increased exactly cancels out later when the patent is held. Of course with the added overhead of bureaucracy this ends up being a net negative.

My question to you, do you think that my hypothesis is true? Can it be that we might be trading something else in exchange for innovation?

Thank you for pointing out any flaws with my argument.