Belleflamme (2002)

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1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

Belleflamme (2002)
Title: Pricing Information Goods in the Presence of Copying
Author(s): Paul Belleflamme
Year: 2002
Citation: Belleflamme, Paul. Pricing information goods in the presence of copying. U of London Queen Mary Economics Working Paper 463 (2002).
Link(s): Definitive , Open Access
Key Related Studies:
Discipline:
Linked by: Belleflamme, Omrani and Peitz (2015)
About the Data
Data Description: This study uses no original data but is a review of existing literature to analyse two models of copying: one where there is marginal or no cost to the producer and one where there is a cost significant enough to make copying inefficient. Using this analysis the study then determines the effects of copying on social welfare.
Data Type:
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: Yes
Comparative Study?: Yes
Literature review?: Yes
Government or policy study?: No
Time Period(s) of Collection:
Funder(s):

Abstract

The effects of (private, small-scale) copying on the pricing behavior of producers of information goods are studied within a unified model a la Mussa-Rosen (1978). When the copying technology involves a marginal cost and no fixed cost, producers act independently. In this simple framework, we highlight the trade-off between ex ante and ex post efficiency considerations (how to provide the right incentives to create whilst limiting monopoly distortions?). When the copying technology involves a fixed cost and no marginal cost, pricing decisions are interdependent. We investigate the strategic pricing game by focussing on some significant symmetric Nash equilibria.

Main Results of the Study

  • Copying reduces the overall profits of the producer, but increases the availability of goods at a cheaper price to the consumer.
  • Therefore overall copying leads to an increase in social welfare

Policy Implications as Stated By Author

  • Information goods can be protected by IP laws but the existence of such laws does not on its own guarantee protection
  • Technical measures (such as DRM) can also protect goods but are also imperfect and can be 'cracked'
  • As a result, illegal copying (piracy) cannot be completely avoided
  • It is there important to understand how copying affects the demand for legitimate information goods and the pricing strategy of their producers
  • It is also important from a policy perspective to understand the social welfare implications of copying


Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Green-tick.png
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Green-tick.png
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Green-tick.png
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)
Green-tick.png

Datasets

Sample size: 2
Level of aggregation: Models of copying
Period of material under study: 1981 to 2001