Crowding-Out Effects of Public Libraries and the Public Lending Right

36 Pages Posted: 7 Dec 2017 Last revised: 7 May 2019

See all articles by Kyogo Kanazawa

Kyogo Kanazawa

Graduate School of Economics, The University of Tokyo

Kohei Kawaguchi

Hong Kong University of Science and Technology

Date Written: May 2, 2019

Abstract

The public lending right (PLR) compensates authors for losses caused by public libraries' free lending of books. Setting the appropriate rate to maintain authors' incentives to create new works is important. We construct a novel dataset that integrates bookstores' sales data with copy data from public libraries in Japan and quantify the crowding-out effects of public libraries. We control for title-municipality-specific, months-after-publication-specific, and municipality-month-specific unobserved heterogeneities. We found that overall crowding-out effects exist. Moreover, we found the the effects to be highly progressive: the effects are stronger for popular titles. The total loss in revenue during the data period is 17.5% of actual sales revenue, which is higher than public libraries' expenditure on books (5%). The estimates indicate that the prevailing PLR rates are overly low to compensate for losses for popular books but that this could be a pure subsidy to other books.

Keywords: Book, Crowding-out, Copyright, Japan, Lending right, Library

JEL Classification: K11, L30, L67, O34, O38

Suggested Citation

Kanazawa, Kyogo and Kawaguchi, Kohei, Crowding-Out Effects of Public Libraries and the Public Lending Right (May 2, 2019). Available at SSRN: https://ssrn.com/abstract=3082016 or http://dx.doi.org/10.2139/ssrn.3082016

Kyogo Kanazawa

Graduate School of Economics, The University of Tokyo ( email )

Yayoi 1-1-1
Bunkyo-ku
Tokyo, Tokyo 113-8657
Japan

Kohei Kawaguchi (Contact Author)

Hong Kong University of Science and Technology ( email )

6070 LSK Building, HKUST
Clear Water Bay
Kowloon
Hong Kong

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