Patents don’t create monopoly pricing but prizes do create deadweight loss that impedes commercialization
Daniel F. Spulber, 2015 - Elinor Hobbs Distinguished Professor of International Business and Professor of Strategy at the Kellogg School of Management at Northwestern. “Public Prizes versus Market Prices: Should Contents Replace Patents,” 97 J. PAT. & TRADEMARK OFF. SOC'y 690 (2015). Hein Online, Accessed via University of Michigan //DH
The standard argument for public prizes further assumes that market prices create monopoly deadweight welfare losses. This assumption is inaccurate because extensive competition in the markets for inventions and products reduces prices and mitigates deadweight welfare loss. Also, market competition promotes efficiency because firms have incentives to reduce the transaction costs of commercialization and innovation. I conclude that the deadweight welfare losses resulting from a government prize system are likely to substantially exceed any such losses from competitive markets - replacing prices with prizes would lower social welfare.