Muddy Rules for Cyberspace

Abstract:     
Digital communication media such as the Internet pose difficult challenges for traditional forms of intellectual property protection. Much recent scholarship and considerable governmental attention has been focused on adapting and expanding copyright to encompass digital works of authorship. These efforts have been justified on the grounds that clear property rights are necessary to allow efficient allocation of intellectual property between private parties.

However, these rationales ignore the literature regarding the efficiency of unclear or "muddy" property entitlements. Where transaction costs of private bargaining are high, "muddy" rules will tend to force parties into informal bargaining transactions. Transaction costs on the Internet may tend to be high because of the number of parties involved, the difficulty of locating the parties, increased opportunity for strategic behavior, and the transborder nature of the medium. Thus, informal transactions or "self-help" may be the most efficient means for provision of digital works. In such a case, "muddy" or unclear rules should perhaps be favored for on-line entitlements.

Number of Pages in PDF File: 56

JEL Classification: F1, K2, K3

working papers series