The Market for Digital Piracy

Abstract:     
Competition may occur simultaneously at a variety of different levels: among individuals, firms, and nations. The Internet promises simultaneously to impact both international competition in informational goods and interjurisdictional competition in law as a product. Because it permits remote contact between information producers and information consumers, the Internet may promote desireable interjurisdictional competition in copyright law as a product. However, copyright law has relied on distributional inefficiency to overcome the public goods problem in the production of creative works. By increasing distributional efficiency, the Internet threatens to undermine this goal of promoting information goods. Thus, efficiency gains in the international copyright "race to the top" may simultaneously trigger an international "race to the bottom" in information good production. International harmonization of copyright may offer a partial solution to an interjurisdictional "race to the bottom," but such efforts must be approached with caution because of the opportunity for strategic behavior by content producers.

Working Paper Series