Note: This is post #49 in a weekly video series on basic microeconomics.

What would happen if we eliminated patents for industries with high R&D costs, such as the pharmaceutical industry? Eliminating patents in this case may result in less innovation and, specifically, fewer new drugs being created, explains economist Alex Tabarrok. In this video by Marginal Revolution University he considers some of the tradeoffs of patents and looks at alternative ways to reward research and development such as patent buyouts and using prizes to foster innovation.

(If you find the pace of the videos too slow, I’d mend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: The monopoly markup