Engel and Kurschilgen (2010)
Contents
Source Details
| Engel and Kurschilgen (2010) | |
| Title: | Fairness Ex Ante and Ex Post: An Experimental Test of the German “Bestseller Paragraph” |
| Author(s): | Engel, C., Kurschilgen, M.J. |
| Year: | 2010 |
| Citation: | Engel, C., & Kurschilgen, M. J. (2010). Fairness Ex Ante & Ex Post-An Experimental Test of the German'Bestseller Paragraph'. Chicago. |
| Link(s): | Definitive , Open Access |
| Key Related Studies: | |
| Discipline: | |
| Linked by: | |
| About the Data | |
| Data Description: | This research was conducted with the experimental software z-Tree. Student subjects were randomly invited from a subject pool of approximately 3500 participants. 48 student subjects from different majors participated, 27% of which were female.Before every treatment participants received paper instructions and answered a set of control questions. Sessions lasted about one and a half hours. In addition to the earnings that depended on their performance in the experiment, participants received a show-up fee of 2 €. On average, participants earned 12.26 €, with 5.34 € from the baseline (6.04 € for buyers and 4.66 € for sellers), and 4.91 € from the P-treatment (5.13 € for buyers, 5.60 € for sellers, 4 €- fix - for umpires). |
| Data Type: | Primary data |
| Secondary Data Sources: | |
| Data Collection Methods: | |
| Data Analysis Methods: | |
| Industry(ies): | |
| Country(ies): | |
| Cross Country Study?: | No |
| Comparative Study?: | No |
| Literature review?: | |
| Government or policy study?: | |
| Time Period(s) of Collection: |
|
| Funder(s): | |
Abstract
The market for copyrights is characterised by a highly skewed distribution of profits: very few movies, books and songs generate huge profits, whereas the great bulk barely manages to recover production cost. At the moment when the owner of intellectual property grants a licence (“ex ante”), neither party knows the true value of the traded commodity. A seemingly odd provision from German copyright law, the so-called “bestseller paragraph”, stipulates that the seller of a licence has a legally enforceable right to a bonus in case the work (“ex post”) turns out a blockbuster. We experimentally explore the effect of the provision on market prices, on the number of deals struck and on perceived fairness. Our results show that the provision leads to lower prices for copyrights. More copyrights trade. The buyers express less ex-post discontent.
Main Results of the Study
- This provision increases perceived fairness for buyers although not for sellers and leads to lower prices for copyright, leading to increased trade.
- This high level of buyer and seller indicates the ex ante fairness of the provision. The provision reduces buyers’ ex-post discontent but does not affect sellers’ feelings of perceived ex-post fairness.
- These findings should be translatable to other copyright markets with highly skewed earnings and high uncertainty, such as music and exhibitions.
Policy Implications as Stated By Author
The provision leads to more deals at lower prices, as well as reduces perceived ex-post unfairness for buyers but not sellers. Umpires, signifying the judicial remedy, tend to benefit sellers, despite this. Based on this data, the provision is economically beneficial and matches perceived fairness.
Coverage of Study
Datasets
| Sample size: | 48 |
| Level of aggregation: | University students |
| Period of material under study: | April 2009 |
