Patent laws create a dilemma. The idea behind patent protection is to provide inventors, entrepreneurs, and firms an incentive to innovate and develop new products and ideas. However, the incentive provided is to reward the innovator with the temporary ability to earn monopoly profits, which creates deadweight losses. Of the policies described below, which is most likely to preserve socially desirable incentives to innovate while also reducing inefficiencies?

A) Introducing a system of patent buyouts. The government will purchase most patents from inventors and then \"rip up\" the patent so that others can immediately use the idea and prices will fall.

B) Varying patent protection according to the significance of the good. For products associated with public health, like potentially life-saving medications, patents are not enforced as strictly. Patents for products with only commercial uses will be enforced as usual.

C) Eliminating patent protection altogether. Many existing firms make profits without the benefit of patent law protection, implying that firms will be able to discover other ways to profit from their innovations.

D) Reducing the duration of patent law protection. This would allow firms to recover the costs associated with developing a new product but prevent firms from earning outlandish profits.

Reducing the duration of patent law protection. This would allow firms to recover the costs associated with developing a new product but prevent firms from earning outlandish profits.

Answer: Option D.

Explanation:

The major motive and aim of patent is to increase and encourage the motivation of the producers to innovate and produce new things which can increase the efficiency in the process of production. This is done to increase the innovation.

But if the time of patent of a particular good is reduced then the firm will be able to cover it's cost on the innovation but it would not lead to any kind of inefficiencies as others will also be able to use it after patent is over.