The monopoly rents argument while valid has pretty tight limits on application. In 1959 when the St. Lawrence Seaway opened because of its greater throughput we almost saw NYC and Chicago go under and eventually we did see Detroit go under. The Illinois canal made Chicago the connector of the great lakes and Mississippi while the Erie canal was the Great Lakes and Atlantic connector. Prior to 1959 monopoly rents were seen from the Western Shore of Lake Superior to the Atlantic coast. now they are fading. The same is true about IP monopoly rents due to the product life cycle as newspaper chains worldwide can testify to and broadcast TV is likely to follow the same route. The value of IP is dropping all of the time as witness CDs and DVDs.
So while valid this argument has ever shorter shelf lives.
You make a really good point! I hadn't given much thought to the lifespan of the underlying property. It seems to me that there are three trends which work in the opposite direction, lengthening the period the assets can generate monopoly rents and creating new property to generate those rents.
First is the legal system. It's no accident that intellectual property law has developed from a stodgy old "patent law" specialty into the cutting edge of the legal profession. Now the trick is to be able to parse Supreme Court decisions from last week to determine what naturally occurring DNA is non-patentable and what unique laboratory created DNA is. This with one justice writing in his separate opinion that he agrees with the majority in result, but doesn't understand enough of the science to join in supporting the reasoning!
My younger son is a PhD research chemist for PPG. He "watches paint dry". His first project for them was to try to find an alternative to a Japanese company's process patent because PPG thought it was cheaper to develop the alternative than pay the licensing fee. Of course the Japanese patent is published through the USPTO so it's easy to check out and then tweak into something "different". But all this is expensive, very expensive. It's a game that multi-billion dollar multinationals can play, but little companies with mere hundreds of millions are effectively locked out. They can't afford the litigation. This is the norm in commercial law today; it doesn't matter how strong your case is, it matters if you have the resources and determination to spend the money required to "bury" the opposition in expensive litigation. So we now have monopoly rent to legal positions!
Second, and overlapping is branding. Take your patent law firm, make an appointment with the guy down the hall in trademarks and copyrights, tweak the game plan, rinse and repeat. Look at what McDonald's did; trademark everything! (I raise you a Hamburgler and six Fry Guys!) Throw a few million a month into advertising for brand recognition for a few decades and see how many new competitors are in a position to take a run at your market position.
Third is lobbying; not Congress but the staffers who actually write the legislation and the regulatory agencies that write the rules. Throw in a nice job offer when they retire from public service. Hell, Abramoff was promising them jobs a year or two BEFORE they left government. How sympathetic was the treatment his clients got? "The return on investment will always be higher on the dollar spent on lobbying."
The common denominator of these strategies is money. They take lots of money. Large organizations have more money and use it to get more money. The twist is that now the way to get more money is to create monopoly power and create a self-reinforcing feedback. Is it getting better or worse? Good question.
