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Abstract:
Commons and Anticommons problems are the consequence of symmetric structural departures from a unified conception of property. In this paper, we endeavor to provide a dual model of property, where commons and anticommons problems are the consequence of a lack of conformity between use and exclusion rights. The general model is then extended to consider the different equilibria obtained under vertical and horizontal cases of property fragmentation. The paper concludes formulating a hypothesis of legal rules for promoting unity in property.

Abstract:
Copyright scholars suggest that computer technology has reduced transaction costs associated with copyright transfer, allegedly eliminating the need for the fair use doctrines that were developed to allow limited use of copyrighted material in situations where the transaction costs of securing authorized use would be prohibitive. According to this emerging view, in an ideal world with no contracting costs, third party use of copyrighted material could realistically only take place with the express consent of the copyright holder. This would give the author absolute power to dispose of his work, including the right to veto uses, without the possibility of a fair use override of any sort.

This paper shows the limits of such transaction-cost based arguments. If transaction costs provide the dominant economic justification of fair use doctrines, an exogenous reduction of such transaction costs would limit the scope and application of the defense of fair use. Nevertheless, in this paper we suggest that, when viewed in light of the anticommons theory, fair use doctrines retain a valid efficiency justification even in a zero transaction cost environment. Fair use defenses are justifiable, and in fact instrumental, in minimizing the welfare losses prompted by the strategic behavior of the copyright holders. Even if copyright licenses can be transferred at no cost (for instance, in a click and pay frictionless computer world), the strategic behavior of the copyright holders would still create possible deadweight losses.

In this context we identify a number of critical variables that should guide and constrain the application of fair use doctrines. These variables include (a) the number of copyright holders; (b) the degree of complementarity between the copyrighted inputs; (c) the degree of independence between the various copyright holders in the pricing of their licenses; and (d) ability to price discriminate.

Abstract:
This paper applies a model of complementary oligopoly and anticommons pricing to the market for intellectual property rights. Our model demonstrates a surprising and interesting overlooked result: In the market for complementary goods, price coordination and monopolistic pricing do not necessarily represent inefficient equilibria, when compared to the alternative Nash equilibrium. Due to the peculiar cross-price effects in the supply of complementary goods, price coordination and monopolistic supply often constitute an improvement over the alternative equilibrium outcomes. To be precise, the welfare effects of competition and price coordination depend on the nature of the intellectual product concerned. This has significant and obvious implications for the economic analysis of copyright collectivization, as well as for antitrust regulation in this area.

Law and Economics, Property Law, Antitrust Law, anticommons, intellectual property, copyright collectives, complementary oligopoly

Abstract:
In this paper we consider the role that litigation and case selection play in the process of legal change. We examine the effect of judicial path dependence on the consolidation of liability rules and legal remedies, paying special attention to litigation between parties with different stakes. In the presence of asymmetric stakes, judicial path dependence may lead to consolidation or contraction of legal rules. We study the consequence of private litigation decisions on the contraction or consolidation of legal rules under various litigation and judicial environments. We also consider the relevance of the degree of asymmetry in the litigation stakes, the existence and nature of positive litigation costs, and the weight of past precedents on the ongoing process of legal evolution.

Abstract:
This paper develops a general model of anticommons fragmentation in property. To this end, we differentiate between different forms of property fragmentation. With the use of several functionally related examples, we consider the equilibria obtained under different scenarios. The various illustrations are later utilized as building blocks for the development of a general model of fragmented property. The model reveals that the private incentives of excluders do not capture the external effects of their individual decisions. Specifically, our model suggests that the results of underutilization of joint property increase monotonically in both (a) the extent of fragmentation; and (b) the foregone synergies and complementarities between the property fragments. Within this context, we explore some of the important implications for the institutional responses to issues of property fragmentation.

Abstract:
In this article we analyze the expected effects of regulatory overlap in European competition law resulting from Regulation 1/2003. Drawing upon recently developed economic theories of regulatory competition, our model foresees a number of qualitative adjustments resulting from this reform. On one hand, the direct applicability of the exemption provision should increase the overall amount of exemptions. On the other hand, a decentralized system permits private litigants' forum shopping, and parallel enforcement by multiple national competition authorities will drive up the number of infringement findings. Although the precise direction of substantive competition law is unclear, the overall effect is higher levels of regulatory activity. This entails not only greater administrative costs but also suggests increased transaction costs for doing business in the post-Regulation 1/2003 European Union.

Regulatory competition, antitrust, european competition law

Abstract:
This paper defines a framework for anticommons analysis based on the fragmentation of property rights. In differentiating between sequential and simultaneous cases of property fragmentation, we describe and assess the equilibria obtained under each scenario. Our model reveals how the private incentives of excluders do not capture the external effects of their decisions. Moreover, our model suggests that the result of underutilization of joint property increases monotonically in both (a) the extent of fragmentation; and (b) the foregone synergies and complementarities between the property fragments. Within this context, we can therefore explore important implications for possible institutional responses to a range of issues raised by the concept of property fragmentation.

Abstract:
This Article conducts an experimental investigation of anticommons dilemmas. The results confirm that anticommons deadweight losses increase with the degree of complementarity and the degree of fragmentation of property. Our study further provides three novel insights into the problem of fragmentation. First, the data illustrates that individual right holders ignore the expected value of bundling and instead focus on the maximum profit he or she could realize by bundling. Second, the experiments suggest that uncertainty amplifies the anticommons pricing effect. Finally, cooperation is higher in cases wherethe value of bundling is more uncertain as opposed to scenarios where there is relative certainty of creating surplus but there is a (modest) chance of losses from bundling.

Anticommons, property regimes, law and economics

Abstract:
This Article argues that recent developments in economic theory provide a new rationale for the dichotomous approach of land use arrangements in the law of servitudes that is almost universal in the modern Western legal tradition. The treatment of certain land-related promises as enforceable contracts between parties, rather than real rights that run with the land in perpetuity, can be explained as an attempt to minimize the transaction and strategic costs resulting from dysfunctional property arrangements. As demonstrated by the Authors, benchmark doctrines such as touch and concern, and the civil law principles of prediality and numerus clausus, have served as instruments to limit excessive or dysfunctional fragmentation of property rights. Section I of this Article describes the dichotomous approach of land use arrangements in the law of servitudes in Common Law and Civil Law systems. Section II provides a functional explanation of the legal rules in this area. Section III documents and explains the changing approach to land use law in both Common Law and Civil Law jurisdictions. Section IV discusses the role of property law in a changing economy. Section V reflects on the appropriate scope of freedom of contract in the law of servitudes. Section VI concludes.

property law, servitudes, fragmentation, anticommons

Abstract:
Recently, a new concept, the anticommons dilemma, has been introduced in economic literature. In an anticommons property regime, multiple co-owners have the right to exclude one another from benefiting from a common resource. The economic literature has unveiled symmetry between commons and anticommons problems. Our experimental results reveal an interesting asymmetry. Anticommons situations generate greater opportunistic behavior than an equivalent commons dilemma (Study 1), and anticommons dilemmas yield a greater risk for underuse compared to commons dilemmas (Study 2). It was therefore concluded that anticommons might be considered as having even more severe and problematic consequences than the commons dilemma.

Property Law

Abstract:
For law enforcement purposes corruption and fraud are hard battles. Because of the highly secretive and premeditated nature of these crimes, prime witnesses are themselves often implicated in the fraudulent transaction. Promises of immunity and whistle blowing rewards are often required to resolve these information asymmetries. These insights have set a trend, both in scholarship and law enforcement practice, towards reward-based approaches (carrots), as an alternative or complement to punishment based deterrence (sticks).

Applying the U.S. False Claims Act (FCA) as an analytical framework, we provide a critical review of the efficiency limitations of whistle blowing. More specifically, the formal model developed in this contribution, reveals a gap between social and private incentives in whistle blowing, both with regard to the decision to pursue litigation and the timing of whistle blowing. First, while an insider will blow the whistle whenever his expected recovery exceeds the expected costs of litigation, enforcement agencies seek to optimize enforcement in the long run. The autonomy of whistle blowers to pursue claims without government involvement, weakens the government's bargaining position and obstructs the government's ability to weigh in wider factors of enforcement (the effect of an individual case on a multiple claim suit, etc.). Second, whenever rewards are tied to recovery, bounty awards create a perverse incentive whereby fraudulent practices are not terminated at a socially optimal point in time. The potential race among whistle blowers cannot mitigate this effect fully because the stigma and loss of opportunities on the job market act as internal constraints on whistle blowing.

whistle blowing, False Claims Act, law and economics

Abstract:
Drawing on socio-psychological literature and new data from an empirical study, this Article posits that copyright litigation faces an impossibility theorem: lawsuits against file sharers cannot simultaneously achieve effective deterrence and promote pro-copyright norms. Anti-copyright norms of file swappers are strengthened when the level of copyright enforcement increases, which results in more downloading whenever enforcement is temporarily suspended. Enforcement has an ambivalent effect on individuals who have no experience with file sharing. Severe sanctions do not have a counterproductive effect on copyright norms of such non-file sharers, yet exposure to information on copyright enforcement reinforces the expectation that others are downloading.

The Article reflects on the lessons learned from the study, in particular with regard to the policy choices that regulators, courts, and copyright-dependent industries face when approaching the widespread use of copyrighted material on file-sharing networks. These options, including criminal prosecutions of digital piracy, copyright education, self-help strategies, and collective licensing, are evaluated in light of the interaction of deterrence and anti-copyright norms.

copyright law, litigation, P2P, file sharing

Abstract:
This article develops a theory of legal evolution that links private property right allocations in intellectual property goods to changes in economic values arising from developing technology. Rather than simply resulting from interest group pressure and rent-seeking, the emergence of intellectual property rights is best described as a response to increasing economic value and diminishing transaction costs, resulting from synergies between new technologies and intellectual content. In this process of legal change in intellectual property, the inherent uncertainty as to the usefulness of technology in protecting content leads to increased efforts of legislative and judicial capture by both content providers and consumers. The resulting social mechanism predicts a back and forth of the legal allocation of use rights between producers and users. As a matter of allocative efficiency, however, there exists considerable friction between the "multi-component" or complementary nature of works and the continued extension of property right-protection to increasingly smaller units of intellectual and scientific creation. As an economic model of fragmentation demonstrates, the uncoordinated exercise by right holders of their exclusion rights might lead to sub-optimal levels of production. In light of this, doctrines of fair use, blocking patents, equivalent patents, and generic trademarks serve as important points of moderation of the deadweight losses that might ensue when dealing with the uncoordinated exercise of control rights over complementary property rights.

intellectual property rights, legal evolution, complementary goods

Abstract:
In situations where a social group perceives legal sanctions to be excessive with respect to the behavior that is being punished, law enforcement may inadvertently strengthen pre-existing antisocial norms. This paper examines the hypothesis of countervailing norm effects as a possible explanation for the pervasiveness of copyright non-compliance in the face of lawsuits against file sharers. We investigate the interaction between law enforcement and pre-existing beliefs and norms experimentally in two studies that simulate the sensitivity of copyright infringers by imposing varying probabilistic penalties. For occasional users, increasing the penalty had no effect on underlying norms. For frequent users increased copyright enforcement has adverse effects on both anti-copyright norms and behavior. Our results provide new evidence on the interference between norms and enforcement.

Copyright Law, Expressive law, Social Norms, Enforcement

Abstract:
This Article discusses the dynamics of shared political accountability and provides a supply- and demand-side analysis of disaster management. Because multiple levels of government share political accountability in national scale disasters, disaster management is subject to a collective action problem. Introducing the concept of horizontal political externalities, this Article explains the shortcomings of disaster management in terms of asymmetric political accountability costs for ex ante preparedness and ex post relief. In the presence of shared accountability, investments in prevention and relief by one government actor confer positive externalities upon other government actors by reducing the overall chance of being held responsible in ensuing disasters. In contrast, ex post disaster relief involves negative externalities when action by one agency makes other agencies or representatives look worse. Because positive externalities are undersupplied and negative externalities are oversupplied, political externalities distort disaster management policy. When political accountability is shared, no single actor bears the full brunt of accountability. In addition, uncertainty and finger pointing reduce the total sum of political accountability. The different effects of ex ante and ex post disaster management on political accountability may shed light on events before and after Hurricane Katrina. I provide suggestions for further avenues of empirical and theoretical research on this new positive political theory of horizontal political externalities and political accountability losses.

political externalities, disaster management, Katrina

Abstract:
A semicommons regime exists when the efficient use of a resource requires the coexistence of both common and private uses. In a seminal article, Henry Smith examined the system of semicommons property in regard to medieval open-fields. In such a system, peasants shared common land for collective grazing, but used privately owned scattered strips for grain growing. This paper provides the first formal model of semicommons property regimes. Our model demonstrates (1) how the costs of strategic behavior in semicommons regimes may outweigh those in commons regimes and (2) how semicommons regimes may solve collective action problems by introducing anticommons arrangements. We extend previous property literature by offering new insights as to conditions in which mixed property regimes emerge and fragmentation solutions are favored.

commons, anticommons, semicommons, property

Abstract:
This Article examines the symbiotic relationship between copyright law and technology. I describe how an environment characterized by rapid technological change creates two conditions that determine the direction and evolution of copyright law: legal delay and legal uncertainty. I explain how uncertainty over the application of existing copyright law to newly emerging technology catalyzes the actions of copyright owners and users. I argue that uncertainty and delay (1) have an enabling effect on anticopyright sentiments, (2) lead to a greater reliance on self-help efforts by content providers and users, and (3) induce legislative involvement in copyright law. In the final Part of this Article, I consider how the framework of technological uncertainty and delay helps to explain a number of emerging issues in copyright law. I conclude by providing normative proposals for copyright reform. These proposals relate to the choice between standards and rules, as well as the role of courts, legislators, and administrative agencies in the development of copyright law.

copyright law, timing, technology, social norms

Abstract:
This Article amends an important theory by Mark Grady on nondurable precaution (Grady, 1988). We present the first formal model on durable precaution, and add three insights to the literature. First, we argue that, under current tort doctrine, the interaction between nondurable precautions and mental costs create a self-sustaining expansion of tort law. Because the risk of liability creates additional interference effects, tort law perpetuates the expansion of awards. Second, we demonstrate that socially excessive suits are more likely to be filed in the event of nondurable technology. This is because a plaintiff does not consider the increase of interference costs as a private cost, when initiating a lawsuit. Third, while new harm-reducing technology likely increases accident rates, it also raises the ratio of trial costs to harm, thus leaving undetermined the overall effect of new technology on the rate of litigation.

tort law, tort award, precaution, technology

Abstract:
This Article advances a proposal that would substantially increase access to justice for valuable lawsuits that are currently deterred by litigation costs. In our proposed system, a plaintiff is allowed to select a damage multiplier, which determines the amount of damages recoverable if the case is won. Courts then randomly select cases for litigation with a probability inverse to the multiplier chosen by the plaintiff.

litigation, procedure, tort law

Abstract:
Relying on the economic theory of real property, commentators argue that patent law is better suited to a property rule regime than a liability rule system. The underlying assumption is that ex ante incentives for innovation are best promoted by enabling patent holders to negotiate licenses against the backdrop of an injunction. By contrast, judicially determined damage remedies systematically undervalue innovation. However, recent judicial developments have started to deny injunctions in patent infringement cases in favour of awarding damages, making it appear that patent law will now be increasingly governed by liability rules. This article reflects on this trend by considering the case of patent market failure. It argues that many of the preconditions that work against liability rules similarly affect property rules and private bargaining. Patent market failure is caused by difficulties in valuing (and pricing) innovation, establishing the boundaries of patents and resolving the externalities involved in patent licensing. Patent market failure strengthens the case for liability rules that provide follow-up innovators access to patents, while eliminating the detrimental effect of the anticommons.

patent market failure, liability rules, property rules