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Home Publications Blogs Beat the Press Protectionism Leads to Corruption #4567

Protectionism Leads to Corruption #4567

Tuesday, 30 November 2010 05:46

Nearly all economists speak derisively of tariff barriers that raise the price of imported goods above their marginal cost. In addition to the inefficiency this causes, tariff protection also invites corruption as the protected industries try to maximize the value of the rents they receive.

The identical logic applies to patent protection, except patents can raise the price of goods by tens or hundreds of times the competitive market price, not the 15-30 percent that would be more typical of tariff protection. It would be useful if this point was made in the context of an article reporting on how a drug company had ghost authored a textbook for two medical researchers.

Comments (3)Add Comment
Death Panelist Wants to Abolish Patents and Ghostwriters
written by izzatzo, November 30, 2010 10:06
Just for that Mr Commy Mommy, we're pulling all our MRI scanning machines off the market due to the uncertainty you have created with this blog post about future regulation of economic rent in the health care sector, not to mention disruption of the budding ghostwriting cottage industry.

You alone will have to live with the consequences of untold suffering and death from this reckless, reprehensible comment. So what death panel are you on? Is it Death to Property Rights or Free Market Killer? No matter, both are covered in our upcoming publication from Ghostwriters Inc: 'They May Be Commies, But They're Our Commies'.
Krugman asks for tariffs as a last resort...
written by pete, November 30, 2010 11:12
Anyway, rent seeking isn't confined to tariffs. What about banks raising fixed costs through Dodd Frank and wiping out the little guys? The list goes on. This is by far the biggest argument for less government...not that there aren't things it should do...its just that regulatory capture is so easy. The International Trade Commission is world famous for being captured. Want a tariff, have your senator call the ITC.
What'a a patent?
written by OJC, November 30, 2010 2:49
Dang it Dean, a patent should be, by the Constitution, a reward for completely revealing an invention to all, rather than keeping it as a secret, which is also legally protected. The system implementation is all screwed up and needs serious reform, mainly judicial, but the idea is sound and should not be abandoned. Fix it, don't nix it.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.