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The Socially Desirable Size of Copyright Fees

10 Pages Posted: 15 Jun 2008  

William J. Baumol

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies; Leonard N. Stern School of Business - Department of Economics

Abstract

Licensing of copyrighted material can contribute to welfare. But what fee is socially desirable fee? The owner's marginal cost of licensing is often near zero, but P = MC = 0 is arguably neither equitable nor an efficient incentive for further creative activity. Here two fee-setting approaches are described, assuming copyright rules are pre-established and determine the holder's earnings, absent licensing. One approach is Ramsey pricing, theoretically second best and able to preserve the copyholder's earnings. The second is 'parity pricing', as derived in the price-regulation literature, which can ensure effective free entry into commercial use of the licensed material.

Keywords: Copyright, Fees, Size

Suggested Citation

Baumol, William J., The Socially Desirable Size of Copyright Fees. Review of Economic Research on Copyright Issues, Vol. 1, No. 1, pp. 83-92, 2004. Available at SSRN: https://ssrn.com/abstract=1146195

William J. Baumol (Contact Author)

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies ( email )

New York, NY
United States
212-998-8943 (Phone)
212-995-3932 (Fax)

Leonard N. Stern School of Business - Department of Economics

269 Mercer Street
New York, NY 10003
United States

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