Final answer:
Becoming a licensor through intellectual property rights like patents allows an innovator to have a temporary monopoly, typically up to 20 or 21 years, to earn profits from their invention, significantly contributing to the economy and motivating further innovation.
Step-by-step explanation:
When understanding the benefits of becoming a licensor, we look at the advantages granted by intellectual property rights. These rights are essential for innovative firms to secure and recoup their investment in research and development (R&D). One of the cornerstone concepts in intellectual property is the patent, which allows the inventor the exclusive legal right to make, use, or sell their invention for a specified period, typically granting them time to earn monopoly profits from their innovation.
For instance, in the pharmaceutical industry, patents are critical. Without them, a company could only earn a normal rate of profit due to competition. However, with a patent, they can potentially earn much more for a while. One common question that arises is, how long does a patent last? While the time can vary, for new drugs, the exclusivity period provided by a patent can be up to 20 or 21 years, depending on the specific legislation of a country.
Patents encourage further innovation by allowing original inventors to retain a significant portion of the economic benefits from their inventions, although they typically receive only one-third to one-half of the total economic value.