Chen and Png ("003)

From Copyright EVIDENCE

Advertising Architectural Publishing of books, periodicals and other publishing Programming and broadcasting Computer programming Computer consultancy Creative, arts and entertainment Cultural education

Film and motion pictures Sound recording and music publishing Photographic activities PR and communication Software publishing (including video games) Specialised design Television programmes Translation and interpretation

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

Chen and Png (2003)
Title: Information Goods Pricing and Copyright Enforcement: Welfare Analysis
Author(s): Yeh-ning Chen and Ivan Png
Year: 2000
Citation: Chen, Yeh-ning, and Ivan Png. Information goods pricing and copyright enforcement: Welfare analysis. Information Systems Research 14.1 (2003): 107-123.
Link(s): Definitive
Key Related Studies:
Discipline:
Linked by:
About the Data
Data Description: Literature review
Data Type: Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: No
Comparative Study?: No
Literature review?: Yes
Government or policy study?: No
Time Period(s) of Collection:
  • 1984 to 1999
Funder(s):

Abstract

We consider how the government should set the fine for copying, tax on copying medium, and subsidy on legitimate purchases, whereas a monopoly publisher sets price and spending on detection. There are two segments of potential software users—ethical users who will not copy, and unethical users who would copy if the benefit outweighs the cost. In de ciding on policy, the government must consider how the publisher adjusts price and detection to changes in the fine, tax, and subsidy. Our key welfare result is that increases in detection affect welfare more negatively than price cuts. We also show that the tax is welfare superior to the fine, and that a subsidy is optimal. Generally, government policies that focus on penalties alone will miss the social welfare optimum.

Main Results of the Study

We derived three welfare results. Our key result is that, whereas the producer of an information good may view pricing and enforcement as substitutes in its strategy, the two variables have quite different welfare implications. By reducing the expected benefit among those who copy, an increase in detection imposes greater social losses than a price cut. Accordingly, society prefers that information goods producers man age piracy through price cuts rather than enforcement. Our second result is that, if copying occurs, then a tax on the copying medium is welfare superior to a fine on individuals who are detected to have made copies. The tax has less effect on the legitimate price and encourages the publisher to reduce spending on detection. Our final result is that it is optimal to sub sidize legitimate purchases. Besides stimulating usage, the subsidy leads the publisher to reduce spending on detection. Generally, then, our analysis suggests that policies focusing on penalties alone while ignoring taxes and subsidies would miss the social welfare optimum.

Policy Implications as Stated By Author

  • Increases in detection affect welfare more negatively than price cuts
  • A tax is welfare superior to a fine, and a subsidy is optimal
  • Government policies that focus on penalties alone will miss the social welfare optimum.



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)?
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)
Green-tick.png
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: 1
Level of aggregation: Individual data
Period of material under study: 1984 to 1999