What we have argued so far may not sound altogether incredible to the alert observer of the economics of innovation. Theory aside, what have we shown, after all? That thriving innovation has been and still is commonplace in the absence of intellectual monopoly and that intellectual monopoly leads to substantial and well-documented reductions in economic freedom and general prosperity. However, while expounding the theory of competitive innovation, we also recognized that, under perfect competition, some socially desirable innovations would not be produced because the indivisibility involved with introducing the first copy or implementation of the new idea is too large, relative to the size of the underlying market. When this is the case, monopoly power may generate the necessary incentive for the putative innovator to introduce socially valuable goods. And the value for society of these goods could dwarf the social losses we have documented. In fact, were standard theory correct, so that most innovators gave up innovating in a world without intellectual property, the gains from patents and copyright would certainly dwarf those losses. Alas, as we noted, standard theory is not even internally coherent, and its predictions are flatly violated by the facts reported in Chapters 2 and 3.

Nevertheless, when in the previous chapter we argued against all kinds of theoretical reasons brought forward to justify intellectual monopoly on scientific grounds, we carefully avoided stating that it is never the case the fixed cost of innovation is too large to be paid for by competitive rents.