Do patents help or hinder innovation? | tutor2u Economics

Innovation matters because there are limits to simply copying or imitating what rival firms have managed to achieve. Do patents help or hinder innovation?

Patents may prevent other companies from building on technological developments and therefore hold back the innovative process. Would compulsory licensing of patents be an appropriate policy response in this situation and help small start-ups in particular?

Innovation Lessons from Bell Labs

Bell Labs were the biggest innovators of their time, but did their patents block smaller companies from building upon this? Monika Schnitzer (University of Mannheim) explains how requiring Bell Labs to license their patents and forcing them to give up monopoly power caused more innovation.

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