Business is one of the most creative activities ever. It creates ideas. Both creativity and business can go together, they are not mutually destructive as the majority believes. The economics of creativity deals with two system values. One concerns the physical products, which are tangible. The other is based on intellectual property, which is intangible. Managing creativity involves knowing when to exploit ideas and then when to assert intellectual property rights.
Despite the fact that business is meant to make a profit, free-riding, which means benefiting from another person’s ideas without paying, occurs. Free riding can be seen as a cost for the creative economy. Some of the most self-explanatory costs of creative economy are broadly described in the second last part of this paper. People use free-riding to enhance their own knowledge and skills. From a supplier’s point of view, free-riding shortens technological and product life cycles. Being first to market is a major advantage but an innovator has only a short time to establish a new product before others begin to compete. But, in order for some people to benefit, others must go without. Debate has gone on about this exchange. Some economists argue that any constraint on idea hampers creativity slows down economic development; others consider that monopoly is necessary to reward innovation and to better allocate resources.
