The Economics of Copyright ‘Fair Use’ in a Networked World
5 Pages Posted: 9 Jul 2011
Date Written: 2002
The recent success of file-sharing technologies such as Napster has highlighted the economic question of whether copying increases or decreases the market value of copyrighted works. Contrary to Michele Boldrin and David K. Levine (2002), we show that Napster-type services are likely to reduce copyright value. This economic question of the effect of copying on copyright value largely coincides with the legal question of whether copying is “fair use.” The primary legal determinant of “fair use” (or use that does not require authorization by the copyright-holder) is whether the use adversely affects the present or future economic value of the copyrighted work. However, given this legal standard, it is unclear why copyright holders ever disagree with the court regarding “fair use.” Our analysis shows that there is no inherent conflict between the court and copyright holders with regard to particular uses, but why there may be a conflict with regard to a technology that has both “fair” and infringing uses.
JEL Classification: L10, K2
Suggested Citation: Suggested Citation