The Economics of Intellectual Property Rights in Developing Countries: Lessons from a Literature Review
Conventional economic theory asserts that inefficient markets result from a product or service for which there are no ready substitutes being provided by a single seller (i.e. a monopoly). An inefficient outcome is defined as one that does not maximise the welfare gains to society. This is often evident in monopolistically competitive markets; even more so in outright monopolistic markets. A monopolist usually restricts output – and consumer choice – and charges a price higher than would occur in a competitive situation. Excessive profits are maintained because other competitors do not enter the market,due to some market barrier to entry or because of ineffective regulation.