Fixing Safe Harbor: An Economic Analysis

Phoenix Center Policy Paper, Number 52

27 Pages Posted: 20 Mar 2018

See all articles by T. Randolph Beard

T. Randolph Beard

Auburn University

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Michael L. Stern

Auburn University; Phoenix Center for Advanced Legal & Economic Public Policy Studies

Date Written: August 1, 2017

Abstract

When a pirated version of a copyrighted work is shared over the Internet, many online intermediaries may participate, exposing these firms to liability through legal concepts such as direct, contributory and vicarious infringement. Safe harbors largely shield intermediaries from “crippling liability” in return for cooperative action on infringing materials. Yet, digital piracy remains a problem. In this POLICY PAPER, we offer a simple economic model of safe harbor protection, demonstrating that de minimis liability for these platforms promotes infringing platforms to the detriment of responsible ones. Increasing the risk of liability for infringement results in a “separating equilibrium,” with one platform offering only legitimate and high-value content and another offering a combination of illegitimate and low-value content. Effective platform liability should ultimately change the structure of the platform industry, which we believe should improve enforcement of copyright law. Legal changes similar to those prescribed here were recently been proposed in the European Union.

Keywords: Copyright, Safe Harbors, Infringement, Liability

JEL Classification: O3

Suggested Citation

Beard, T. Randolph and Ford, George S. and Stern, Michael L., Fixing Safe Harbor: An Economic Analysis (August 1, 2017). Phoenix Center Policy Paper, Number 52. Available at SSRN: https://ssrn.com/abstract=3138745 or http://dx.doi.org/10.2139/ssrn.3138745

T. Randolph Beard

Auburn University

415 West Magnolia Avenue
Auburn, AL 36849
United States

George S. Ford (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Michael L. Stern

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States

Phoenix Center for Advanced Legal & Economic Public Policy Studies

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
31
Abstract Views
244
PlumX Metrics