This is a proposal that is: – good for consumers (overall)

The worst economic effect that a patent produces is deadweight loss. Deadweight loss is an economic term used to explain how when there is a patent for a new technology, some people are “priced out” of its enjoyment. This means that they do not have access to a specific technology because they are not able to pay the monopolistic price set for it by the innovator, although they would use it absent a patent (paying the competitive price for it). Another negative effect that a patent has is the reduction of consumer surplus (that which healthy competition is supposed to create and antitrust or competition enforcement agencies around the world address when curtailed); with a reduction in consumer surplus, some consumers do access the technology, but pay more for it than they would if competition were allowed in regard to the new technology (competition – which is excluded by a patent – brings prices down).

The exclusion of some consumers and the extra price extracted from those consumers not excluded (i.e. loss of consumer surplus for the consumer), is the price we as a society pay for the very existence of the technology. Although this logic has been challenged, this is the prevailing regulation in most countries of the world (it is set by the TRIPS Agreement as the status quo; see more here).

The enjoyment of a range of new technologies, from life-saving technology to simple convenient technology for common uses, is delayed for some. Those who are left out are not able to pay the monopolistic prices for the period of time set by the law, although they would otherwise buy it at a competitive price. Consumers in the developing world are more prone to becoming these “left out” consumers. Others pay more for it, but they benefit from the technology. These people that do pay more, access and enjoy the technology. These are the people that are rewarding technological advancement, and they do so to the detriment of consumer surplus. Avoiding defending parochial interest alone, globally and overall, consumers would be better off with the TRIPS PLUS ULTRA proposal. Billions would get access to technology. What is without doubt is that with 20-year patents in every country, the populations of countries that have less, on average, are affected more by the current scheme (more people are left out). Let´s share the burden!

Everybody looks like a winner. Are there any affected by this proposal? The consumers of the developed world, of course, but there is an upside for the US. More importantly, this proposal would bring fairness to the global system.

Remember, this proposal is also: