Is the Copyright Monopoly a Best-Selling Fiction?

33 Pages Posted: 11 Sep 2008

See all articles by Stan J. Liebowitz

Stan J. Liebowitz

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Date Written: September 11, 2008

Abstract

This paper attempts to determine the impact of copyright on the prices of books, which is a task that has not, to my knowledge, been undertaken before. Recent prices of best-sellers written between 1895 and 1940, some with copyright and some without, are compared. One set of empirical findings based on typical regressions indicate that the prices of copyrighted works do not appear higher than the prices of non-copyrighted works. Another set of findings, based upon giving greater weights to books that have greater unit sales, implies that copyright raises price by up to 14.5%. This bifurcated result allows the contemplation of two scenarios. In the first, copyright does not raise price at all. This is explained by appealing to the nascent literature on uniform pricing. If books are best described by this model I show that increases in copyright unambiguously increase welfare. The increased-price scenario notes that authors appear to receive all the industry rents and examines the possible deadweight losses due to the higher price of copyrighted books. I calculate a range of deadweight losses based upon seemingly reasonable market assumptions and find the size of the deadweight loss is small compared to industry revenue. Importantly, the size of this deadweight loss appears to be much less than the deadweight losses from a leading alternative system that has been proposed for distributing creative works.

Keywords: copyright, books, monopoly, deadweight loss

JEL Classification: d42, k00, l1, l82, l5

Suggested Citation

Liebowitz, Stan J., Is the Copyright Monopoly a Best-Selling Fiction? (September 11, 2008). Available at SSRN: https://ssrn.com/abstract=1266486 or http://dx.doi.org/10.2139/ssrn.1266486

Stan J. Liebowitz (Contact Author)

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

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Mail Station SM 31
Richardson, TX 75080
United States
972-883-2807 (Phone)
972-883-2818 (Fax)

HOME PAGE: http://www.utdallas.edu/~liebowit/

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