Intellectual Property Rights Are Difficult to Justify under the Humean Economic Theory of Property Since These Rights Do Not Arise from Scarcity; Instead Artificial Scarcity Is Created by the Law

Although the term “intellectual property” is commonly used in the legal field, it is rather problematic in economics, since it is difficult to justify this type of property right with the same arguments that are used to justify private property in tangible goods.

According to the economic theory of property (following David Hume), society benefits from the delimitation and protection of private property rights because goods are scarce. There is no point in defining property rights over abundant goods. On the other hand, when goods are scarce and property is communal, they are not used efficiently. Private property guarantees that scarce goods will be put to their most efficient and productive uses.

It is difficult to justify intellectual property rights under this concept of property, since these rights do not arise from the scarcity of the appropriated objects; rather, their purpose is to create scarcity, thereby generating a monopoly rent for holders of such rights. In such case, the law does not protect property over a scarce good, since the law itself created the scarcity, and this artificial scarcity generates the monopoly rents that confer value upon those rights. The big difference between patents and copyrights on the one hand, and tangible goods on the other, is that the latter will be scarce even if there are no well-defined property rights; in the case of patents and copyrights, the scarcity arises only after the property right is defined.

--Julio H. Cole, "Patents and Copyrights: Do the Benefits Exceed the Costs?" Journal of Libertarian Studies 15, no. 4 (Fall 2001): 81.