Patents raise consumer prices by allowing patent owners to have artificial control over their products

[Christopher, Samuel N, 1-31-2024, Georgia Law Review, “Antisocial Innovation,” Volume 58, No. 2, p. 592-3, https://digitalcommons.law.uga.edu/glr/vol58/iss2/4/, accessed 7-14-2024, CM]

Unlike some of the incentives described above, the government¶ only issues patent rights to people who actually produce an¶ invention. In order to obtain patents, inventors must demonstrate¶ that they have generated something that is both novel and nonobvious to other skilled inventors.82 And, in theory at least, their¶ inventions are required to be “useful.”83

Patents differ from prizes, grants, and tax incentives in another¶ way. While the latter are paid directly by the government (and,¶ thus, taxpayers) through spending, issuing patents doesn’t cost the government much.84 But patents definitely have a price. Patent¶ incentives are financed by consumers of products that incorporate¶ patents who must pay higher prices for those goods.85 By enabling¶ patent owners to charge supracompetitive prices, patents act as a¶ tax paid by consumers for the benefit of innovators.86 Thus, unlike¶ other innovation expenditures, when governments promote¶ innovation with the exclusive rights patents confer, their¶ expenditures are “off-budget.”87 This means that it is enormously¶ difficult to estimate the size of society’s contribution to innovation¶ promotion through higher prices for patented goods.88