Rights and relations in modern economic theory

The paper is the 1980 Böhm-Bawerk-lecture given at the University of Innsbruck. Starting from Böhm-Bawerk's book. ‘Rights and relations from the point of view of the economic theory of goods’ the paper tries to evaluate rights and phenomena like goodwill from the perspective of innovation. A framework of three levels of economic activity is developed. The three levels are: consumption (the lowest level), production and innovation (the highest level). Rights are interpreted as instruments of protection of higher level activity from lower level activity. Focus of attention are industries with very high rates of technical progress and innovation. There the most important positive externality of innovation is the increased potential for even more innovations. It is argued that competition policy, as a rule of thumb, must foster competition by innovation and must discourage competition by imitation.