Fairness Ex Ante & Ex Post - An Experimental Test of the German 'Bestseller Paragraph'

32 Pages Posted: 22 Jun 2010 Last revised: 21 Nov 2010

See all articles by Christoph Engel

Christoph Engel

Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Michael J. Kurschilgen

Technical University Munich; Max Planck Institute for Collective Goods

Date Written: November 2010

Abstract

The market for copyrights is characterised by a highly skewed distribution of profits: very few movies, books and songs generate huge profits, whereas the great bulk barely manages to recover production cost. At the moment when the owner of intellectual property grants a licence (“ex ante”), neither party knows the true value of the traded commodity. A seemingly odd provision from German copyright law, the so-called “bestseller paragraph”, stipulates that the seller of a licence has a legally enforceable right to a bonus in case the work (“ex post”) turns out a blockbuster. We experimentally explore the effect of the provision on market prices, on the number of deals struck and on perceived fairness. Our results show that the provision leads to lower prices for copyrights. More copyrights trade. The buyers express less ex-post discontent.

Keywords: experiment, fairness, Copyrights

Suggested Citation

Engel, Christoph and Kurschilgen, Michael J., Fairness Ex Ante & Ex Post - An Experimental Test of the German 'Bestseller Paragraph' (November 2010). 5th Annual Conference on Empirical Legal Studies Paper; MPI Collective Goods Preprint, No. 2010/29. Available at SSRN: https://ssrn.com/abstract=1628725 or http://dx.doi.org/10.2139/ssrn.1628725

Christoph Engel (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
+049 228 914160 (Phone)
+049 228 9141655 (Fax)

HOME PAGE: http://www.coll.mpg.de/engel.html

University of Bonn - Faculty of Law & Economics

Postfach 2220
D-53012 Bonn
Germany

Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students ( email )

Burgemeester Oudlaan 50
PO Box 1738
Rotterdam
Netherlands

Universität Osnabrück - Faculty of Law

Osnabruck, D-49069
Germany

Michael J. Kurschilgen

Technical University Munich ( email )

Arcisstr. 21
München, 80333
Germany

HOME PAGE: http://https://www.mecon.wi.tum.de/index.php?id=28

Max Planck Institute for Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

HOME PAGE: http://www.coll.mpg.de/team/page/michael_kurschilgen

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