Home | Databases | WorldLII | Search | Feedback Edited Legal Collections Data

Yoo, Christopher S. --- "Towards a differentiated products theory of copyright" [2005] ELECD 92; in Takeyama, N. Lisa; Gordon, J. Wendy; Towse, Ruth (eds), "Developments in the Economics of Copyright" (Edward Elgar Publishing, 2005)

Book Title: Developments in the Economics of Copyright

Editor(s): Takeyama, N. Lisa; Gordon, J. Wendy; Towse, Ruth

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843769309

Section: Chapter 6

Section Title: Towards a differentiated products theory of copyright

Author(s): Yoo, Christopher S.

Number of pages: 17

Extract:

6. Towards a differentiated products
theory of copyright
Christopher S. Yoo

6.1 INTRODUCTION

The economic analysis of copyright is largely founded on the premise that
consumption of copyrighted works is non-rivalrous, a premise that distin-
guishes markets for intellectual property from markets for other types of
goods. In the context of copyright, this is generally taken to mean that the
marginal cost associated with the consumption of an incremental unit of
a copyrighted work is effectively zero. Non-rivalry in turn gives rise to a
well-known economic conundrum. If authors are to break even, the prices
they charge must defray the fixed cost needed to produce the work in the
first place (often called `first-copy costs') as well as cover the marginal cost
associated with producing an incremental unit. However, pricing above
marginal cost necessarily reduces welfare by excluding some potential users
from consuming the work even though the benefits they would derive
exceed the costs of permitting them to do so.
This has led scholars to frame copyright in terms of the need to balance
two opposing considerations. On the one hand are the benefits flowing
from the efficient dissemination of copyrighted works (often called the
`access' side of the tradeoff). On the other hand is the need to provide
authors with sufficient compensation to support the creation of their works
(often called the `incentives' side of the tradeoff) (Novos and Waldman,
1984; Johnson, 1985; Liebowitz, 1985; Landes and Posner, 1989). This
tradeoff implicitly posits ...