Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94605
Authors: 
Harbaugh, Rick
Khemka, Rahul
Year of Publication: 
2000
Series/Report no.: 
Claremont Colleges Working Papers in Economics 2000-14
Abstract: 
More intensive copyright enforcement reduces piracy, raises prices, and lowers consumer surplus. We show that these results do not hold regarding the extent rather than intensity of enforcement. When enforcement is targeted at high-value buyers such as corporate and government users, the copyright holder has an incentive to charge super-monopoly prices, thereby encouraging piracy among low-value buyers. Extending enforcement down the demand curve broadens the copyright holderÂ’s captive market, leading to lower prices and higher sales that can increase both profits and consumer surplus. The standard tradeoff between the incentive to generate intellectual property and the cost of monopoly power is therefore avoided. Private enforcement by copyright holders may be insuciently extensive since consumers can also benefit from more extensive enforcement. Similarly, new technologies which lead to stronger control over illicit use can paradoxically benefit consumers.
Subjects: 
piracy
internet
intellectual property
copyright protection
super-monopoly pricing
JEL: 
K11
K42
L86
L43
D42
Document Type: 
Working Paper

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