Oh dear lord... You're using big pharma and one of it's mind-altering profit centers as an example I'm supposed to DEFEND? </facepalm>Here's a far better example. AstraZeneca spent $60bil in R&D last year developing new types of drugs. In total they spend appx. $11bil per approved drug.
Ok, I'll try to play along, but this is hard for me. I'm pretty contemptuous of anything AstraZeneca could produce, and would never put it in my body.
Let's say that they used that money to make a legit drug that cures the measles or something un-evil.
Spending $11billion to do it is the price they'd pay in THIS market to make that outcome. I'm quite sure a large percentage of this is spent on lawyers, compliance, and other paperwork and staffing that result from a system that forces them to concentrate on the patent.
In the theoretical market that they have never heard of IP at all, then they'd have no need for lawyers or any of that stuff because they know that someone is going to rip off their work, and that's just part of the game they are playing.
They would still likely make the drug though, because they have the unique know-how to do it, and he who first brings the drug to market makes the MOST money on it, having earned the best reputation.
Remember the Amazon review system? The world would be full of reputation systems like amazon reviews and consumer reports magazine... These would very naturally be used more as consumers want to know WHO MADE THE BEST PRODUCT.
In that world, AstraZeneca would make their measels cure without profiting billions on it, because everyone would know that the market would reward them MORE than those who copy; just not so insanely as much as we do in this world.
Meanwhile, EVIL drugs like the ones flooding the markets today don't get made at all, because the market doesn't need this shit like it needs a measles cure.
Win/win.