Charles River Associates (2013)
|Charles River Associates (2013)|
|Title:||Assessing the Economic Impacts of Adapting Certain Limitations and Exceptions to Copyright and Related Rights in the EU|
|Author(s):||Charles River Associates|
|Citation:||Assessing the Economic Impacts of Adapting Certain Limitations and Exceptions to Copyright and Related Rights in the EU, Charles River Assoc., (2013), available at|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||Economic analysis of EU copyright exceptions in light of public policy.|
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||Yes|
|Government or policy study?:|
|Time Period(s) of Collection:|
The objective of this report is to develop a framework for economic analysis of copyright exceptions from the public policy perspective. It aims to make the framework useful in particular in the assessment of the merits of current claims for changes to the scope of exceptions. These calls for changes have recently become louder in light of technology improvements. The improvements allow for new channels of distribution and for new uses of creative work. They also reduce the cost of copying and affect transactions costs. With these changes taking place, changes in the scope of exceptions may be required.
Main Results of the Study
- Exceptions are likely to be justified when transaction costs prevent mutually beneficial trade. In the extreme, this a case of missing markets. Some existing exceptions, like the citation exception, seem to be at least in part motivated by such considerations.
- In the view of technological advances, which allow for new modes of exploitation of creative works, calls for new exceptions have been made. Besides enabling new modes of exploitation and use of creative work, technological advances may also result in a reduction in transaction costs.
- Assuming that markets for creative works exist but that the rightholders possess market power – which may result in a deadweight loss and which could potentially be curbed by broader exceptions – it cannot be at present established on the basis of the economic theory alone whether exceptions should be narrowed or broadened in response to a reduction of the cost of making copies of creative works (brought about by technological advances). Furthermore, it cannot be established at present on the basis of theory alone whether exceptions should be broadened or narrowed down as a consequence of the expansion of the consumption possibilities of creative material (again brought about by technological advances). Nevertheless, there may be a case for exceptions in particular when they allow for the development of product qualities that a copyright owner could not produce herself due to transaction costs and technological constraints. Exceptions are also more likely justified in circumstances where hold-up problem risks introducing dynamic inefficiencies (in terms of suppressing incentives to invest).
- Externalities potentially introduce a case for exceptions. The implementation of certain exceptions meant to solve problems due to transaction costs or externalities may run into difficulty when the dissemination and efficient access to the work requires some effort on the part of the right’s owner. It is then worth asking whether some market mechanism, or an alternative intervention cannot overcome the problems associated with externalities.
Policy Implications as Stated By Author
- Technological advances have resulted in a reduction of the costs of authorized and unauthorized copying, a reduction of certain categories of transaction costs, and in opportunities for new uses of creative work. Against this backdrop, calls for new (broader) exceptions have been made; but suggestions that in fact fewer (narrower) exceptions are needed have been made as well. Copyright commentators, stakeholders with opposing interests, policy makers and academics have sometimes taken partial and diametrically opposing views in the debate.
- Absent clearly identified and persistent market inefficiencies, exceptions are not likely to be warranted from an economic perspective.
- Policy-makers should take a cautious approach when considering introducing new exceptions for such reasons: the market power of rightholders is limited by the inherent limitations in the scope (and length) of copyright protection and the availability of substitute creative work; and positive externalities may easily be exaggerated. Furthermore, with technological advances rightholders may increasingly be able to efficiently offer different, inferior versions of copyrighted work, obviating the rationale for the users to “self-produce” them. This means that the social loss due to market power, externalities, or productive inefficiencies, may not be as large as to justify the social costs of exceptions.
- Social costs of exceptions predominantly manifest themselves in the form of reduced incentives for creative work and in the form of reduced incentives of the rightholders and distributors to provide access to existing and new work efficiently. Moreover, exceptions may stall the development of future efficient markets which technological advances may soon enable. Clearly, besides the potential benefits, the policy maker will have to consider the likelihood and the economic significance of these costs in the assessment of new exceptions.