Final answer:
Intellectual Property Rights, like patents, give creators and inventors exclusive rights to their work, encouraging innovation by allowing for the temporary monopoly on profits. However, in certain industries like food and fashion, the absence of these protections can lead to greater innovation due to less restricted idea sharing and iteration. Monopolies formed due to IP rights can sometimes hinder innovation by limiting competition and the development of new ideas.
Step-by-step explanation:
The question should we always patent great IP that results in a sustained competitive advantage involves a consideration of both the protection of intellectual property (IP) and the potential impact on innovation and industry competition. Intellectual Property Rights provide inventors and creators with exclusive rights to their works for a limited period. Patents are a form of IP that gives the inventor the exclusive legal right to make, use, or sell the invention, typically for 20 years in the case of pharmaceutical drugs. These rights are intended to incentivize research and development by allowing firms to earn monopoly profits temporarily. However, economists like Milton Friedman suggest that in some cases, such as with food recipes or fashion designs, the absence of IP protection does not hinder and may even encourage innovation.
Since there is no intellectual property protection for food recipes or fashion designs in the U.S., these industries demonstrate robust competition and high levels of creativity. The reason is that without the threat of legal enforcement of IP, entities are free to iterate on existing ideas, leading to a vibrant and rapidly evolving marketplace. The inefficiency of monopolies created by IP rights may sometimes discourage innovation because they restrict the free flow of ideas and the iterative improvement that drives progress in certain industries.