Harbaugh and Khemka (2010)

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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

Harbaugh and Khemka (2010)
Title: Does Copyright Enforcement Encourage Piracy?
Author(s): Rick Harbaugh and Rahul Khemka
Year: 2010
Citation: Harbaugh, Rick, and Rahul Khemka. Does Copyright Enforcement Encourage Piracy?. The Journal of Industrial Economics 58.2 (2010): 306-323.
Link(s): Definitive
Key Related Studies:
Discipline:
Linked by:
About the Data
Data Description: This study compares two levels of copyright enforcement: one targeting high-value customers and ignoring infringement taking place in other markets, the other utilising tighter enforcement across markets. The study examines the resulting effects on surplus and social welfare using a proposed economic model. The study uses data from the Business Software Alliance on levels of piracy and a literature review.
Data Type: Secondary data
Secondary Data Sources:
  • [[Has data source::Institute for Policy Innovation (IPI: Policy Report #188 [2005])]]
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: Yes
Comparative Study?: Yes
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • 1989 to 2005
Funder(s):

Abstract

When copyright enforcement is targeted at high-value buyers such as corporate and government users, the copyright holder charges super- monopoly prices, thereby encouraging low-value buyers to switch to inferior pirated copies. We show that enlarging the copyright holder's captive market through more extensive copyright enforcement reduces prices toward the monopoly level, increases sales of legitimate copies and can increase consumer surplus. Therefore, in contrast with the case of more intensive copyright enforcement, more extensive copyright enforcement over some range can increase the incentive to generate intellectual property while also reducing the loss to consumers from monopoly power.

Main Results of the Study

Broad-based and targeted copyright enforcement have very different implications for firm pricing strategies, piracy and social welfare. We have focused on copyright enforcement, but targeted enforcement may also be relevant for patent and trademark enforcement. Enforcement imposes a piracy cost which can be viewed as either paid by the bootleggers or by the consumers of pirated copies. In either case, consumer receives surplus from acquiring a pirated copy in the competitive bootlegger market. Targeted enforcement of copyright towards high value customers while allowing piracy for the low value customers allows surplus to flow to both copyright holder and consumer - copyright holder in the form of protecting the income for the legitimate copy and consumers overall as the existence of pirated copies ensures the legitimate copy is priced lower due to the competition.

Policy Implications as Stated By Author

  • Proposition 1: Enforcement targeted at high- value buyers raises the legitimate copy price and decreases consumer surplus, and increases piracy.
  • Proposition 2. More extensive enforcement lowers the legitimate copy price and reduces piracy generally and increases consumer surplus if pirated copies are sufficiently poor substitutes for legitimate copies.
  • Proposition 3. If price discrimination between captive and non-captive markets is possible, more extensive enforcement lowers the captive market price and the non-captive market discounted price and reduces piracy generally.
  • Proposition 4. More intensive broad-based enforcement raises the legitimate copy price, decreases consumer surplus, and reduces piracy.


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: 2
Level of aggregation: Enforcement of copyright models
Period of material under study: 1989 to 2005


Sample size: 1
Level of aggregation: Individual data
Period of material under study: 2000