Lecture 2 - Intellectual property rights: the role of patents in innovation

1. The document discusses the economics of patents and how they can be designed to balance incentives for innovation with allowing useful spillovers. 2. It analyzes optimal patent length, breadth, and height using economic models. Longer patents create more profits but less consumer welfare. Broader patents sacrifice consumer surplus for small profits. 3. Patents should be designed prudently to avoid locking out relevant implications for others and leave room for spillovers, as knowledge has a systems nature and inventions build on each other.