An ars technica post, Study: free markets superior to patent monopolies, reports:

Our economic system is based on the expectation that markets can provide optimal solutions more efficiently than monopolies, with one glaring exception: patents, which are structured in a "winner takes all" manner. A study appearing in today's edition of Science suggests that markets might work here, too.

Now, I know, there are many problems with even evaluating an IP system on utilitarian grounds; but the purported innovation-spurring effects of an IP system are what its advocates usually claim in support of having it. So it's natural to ask: well, where's the proof? Never is it provided. Study after study concludes that an IP system's costs are about equal to, or greater than, any benefits it provides. (See my There's No Such Thing as a Free Patent; What are the Costs of the Patent System?.) So it's no wonder yet another study concludes this.

[Cross-posted at Mises Blog.]

It seems to me that quotes from the actual study itself would be far more reliable and persuasive that a third party synopsis.

The actual study can be found at:

http://www.hss.caltech.edu/~debrah/papers/kp080403submitted.pdf

The suggestion that we woiuld be better off without our current or similar system is patently absurd!!!

I spent a decade as the CEO of a very innoivative engineering driven American manufactirng company with 2,000 employees. We supported an ongoing program of innovation that included engineers,marketing, and financial people. An internal study showed that because our products were designed into other products such as cars, machinery, electronic equipment, switchgear, etc. which in their own right had long design lead times, payback time for our investment typically ran as long as 4-6 years with peak sales at the 8-10 year mark. If we designed an improved product at considerable investment and then GM could take our design and go to China and have it made for half the cost, why should we bother inventing? The financial risk would be to great, so we would not have innovated. I spent Friday afternoons meeting with development teams and gave them full support from the top of the company. We HAD to be able to charge higher prices to support our R&D costs which a copycat provider would not have. Without GOOD patent protecion, we would not have been able to innovate and neither would anyone else, The entiere national process of innovation would slow down dramatically quickly putting the US at a HUGE global disadvantage!! Does anyone reallhg believe that the world of technology would be better of if Microsoft had not been able to have good IP protection? The whole idea is stupid and short sighted baloney that comes from some ivory tower professors who are badly out of touch with the real world. In retirement I mentor graduate students who are incented by our patent system. They would be out partying at nignt instead of innovating without the IP protection carrot.

"The financial risk would be to great, so we would not have innovated."

S.J.: Let's grant that you are right. Still, how do you know the marginal or net value of the wealth pertaining to your innovation, and those like yours, is greater than the cost of the patent system? For example, suppose $30billion of extra wealth is generated by innovations spurred by a patent system, but the system imposes costs of $40billion on the economy. Bad bargain, no? So, how do you know there is a net gain not a net loss?