Patent buyouts spur follow on innovations and emerging technologies while eliminating monopoly distortions in pricing

As with prizes in general, high specificity can be possible in models that include a condition to leave innovations unpatented or eschew monopoly pricing, so product risks are reduced and again, only results would be rewarded. With patent buyouts designed to spur future innovation, specificity is still considerable but less than perfect. It might reduce the cost for other researchers to produce follow-on innovations, who otherwise would have needed to pay for rights to use the patented knowledge. If the buyout price is set between private and social value (and social value can be accurately estimated) then this is a good investment of resources. If the patent holder is the low-cost producer (which is plausible, given their intimate knowledge of the invention), then they would likely still wish to sell, as they would receive the mark-up over private value and be well positioned in the market.38 Patent buyouts would decouple rewards from access by reimbursing inventors separately form sales. Lower prices would then result, which would broaden access to the invention. Monopoly distortions would be eliminated and, since researchers into complementary inventions would not need to contract to split rents or to seek licensing agreements, complementary innovations might burgeon. This happened with the French government patent buyout for the daguerreotype;39 photography flourished. Buyouts could be very effective when applied to frontier technologies, therefore, as follow-on innovations are often necessary for these to deliver their full benefits.40