University of Dayton School of Law
When competitors engage in unrestrained copying of each others' intangible products, the structure can resemble a prisoner's dilemma in which free choice leads to unnecessarily low individual payoffs and low social welfare. There are many ways to avoid these low payoffs, such as contract enforcement, direct regulation of copying behavior through IP, and direct government subsidies. All of these modes alter the payoff pattern away from prisoner's dilemma.
When should lawmakers place copyright law or other IP law among the prime options to consider?
Because copyright, patent, misappropriation and the like all work through private-property markets, one key is to look for asymmetric market conditions. That is, compare the likely transaction costs and other sources of disvalue in markets without IP, and in markets with IP.
Wendy J. Gordon,
Asymmetric Market Failure and Prisoner's Dilemma in Intellectual Property
University of Dayton Law Review
Available at: https://scholarship.law.bu.edu/faculty_scholarship/1987