Nonrivalry and Price Discrimination in Copyright Economics
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ARTICLE SUMMARY
This paper explores the effect of different approaches to copyright on consumers.
POLICY RELEVANCE
The best approach to copyright policy is a position between “strong” and “weak” copyright. Allowing price discrimination will usually help consumers.
KEY TAKEAWAYS
- Created works like books or a fireworks show are “public goods,” meaning that it is hard to stop anyone from enjoying access to the good, and one can use the good without reducing the amount available to others.
- Because some consumers want created works more than others, it makes sense to have a system where those who want the work most pay more for it (“price discrimination”). If all pay the same, the producer might not be paid enough to provide enough works.
- “Price discrimination” is hard with public goods, because those who do not pay cannot be prevented from enjoying the good.
- A copyright policy ensuring that the authors of created works capture all revenues possible from sales, without sharing any for free, ensures that enough works are produced. But enough works can be produced when some aspects of created works are free.
- The traditional view is that markets will not produce enough public goods. But other theories suggest that too many public goods might also be produced.
- Allowing price discrimination will usually increase access to copyrighted works.
- Stronger copyright sometimes harms consumers, and sometimes helps.
- Copyright analysis is polarized, with some favoring maximum protection to encourage creation, and some minimum copyright protection to allow more consumer access.
- Both views include some elements of truth, but neither is entirely correct.
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About Christopher Yoo
Christopher Yoo has emerged as one of the nation’s leading authorities on law and technology. His research focuses on how economic theories of imperfect competition are transforming the regulation of the Internet and other forms of electronic communications. He has been a leading voice in the “network neutrality” debate that has dominated Internet policy over the past several years. He is also pursuing research on copyright theory as well as the history of presidential power. He is the author (with Daniel F.
