This thesis analyses how intellectual property (IP) laws are used in the home consolegame industry and in particular how these laws are used to capture the returns oninvestment, which may indirectly provide a stimulus to innovation. The relationshipis evaluated in three selected markets: The United States (US), the European Union(EU) and People's Republic of China (PRC). The first two of these are selected asrepresentative of developed markets whilst the latter as an instance of an emergingmarket. This thesis analyses and illustrates ways in which three major types ofintellectual property rights - patents, copyright and trademarks operate in thissector of industry.This thesis evaluates this relationship via a unique approach, adopting both a legaland economic analysis. The thesis starts with a detailed market analysis of thisindustry to identify key factors that affect individual firms' abilities to capturereturns on investment. This is followed by section II (comprising Chapters II to IV)which goes on to examine the effects of each type of IPR on these factors in thedeveloped markets of the US and Europe. The analysis in section III shifts the focusfrom these developed markets to the emerging market in the PRC. It identifies theunique attributes and problems of the Chinese market and demonstrates howcontemporary local IP laws can be used to tackle these problems. It is the view ofthis thesis that IP laws theoretically can be used to maximise a firm's return oninvestment while not distorting competition; hence, the thesis suggests that IPRsmay indirectly create incentives to innovate.