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How are Patents good for consumers?
I'm currently studying monopoly's in economics, and one question is why are patents good for consumers? Any ideas / suggestions or even examples would be great..... :)
- cato___Lv 71 decade agoFavorite Answer
Well....If the consumer needs a medicine, to lower cholesterol for example, then the consumer benefits from patents.
Discovering a new medicine costs a lot of money, but manufacturing most medicines is fairly inexpensive. So, If I invest a billion dollars to discover a new cholesterol medicine, I have to charge a lot to get my investment back and make a profit. If I dont have patent protection, then the drug maker down the street can just get a sample of my medicine and figure out how to make it. Because they didnt invest in figuring out which drug works and which doesn't, they can sell the drug for a lot less and I go out of business. So, I wont discover the next drug.
Also, patents expire and they tell how to make the invention. So, when they expire, everyone can make it and in my example, the drug becomes available for the lowest possible price.
Similar examples can be given for other kinds of inventions.
- Nuff SedLv 71 decade ago
Cato's on the right track. In addition, patents can be viewed as "stimulating" creativity by protecting inventors (with a limited monopoly) in exchange for the disclosure of their invention. Knowing what is "already covered' will stimulate other inventors to come up with different ideas that may be even better, to patent them, and thus stimulating yet more inventions as new ideas become known quicker than if they are kept as trade secrets.
Ultimately the consumer benefits from a wider range of products having similar utility for lower costs, based upon the theory that markets desire competition, and where someone can invent a product that legally avoids the existing patents, there will be competition.
Furthermore, once a patent application is filed there can be a lively exchange of licenses and ownership interests, to better adjust the expeditious manufacture and distribution of products using the new invention including more efficient consolidation of resources (e.g., manufacturers of multiple licensed products rather than merely their own inventions), again keeping the costs down and consumer prices lower (to the extent competition reduces profit margins).