Displacement Effects of Public Libraries

Abstract

If free lending in public libraries is displacing sales in bookstores, some compensation may be needed to maintain incentives for authors to create new works. To determine whether this is indeed the case, we created a novel dataset that integrated bookstore sales data with public library copy data in Japan and quantified the displacement effects of public libraries. Controls for title-municipality, months-after-publication, and municipality-month-specific unobserved heterogeneity were introduced. The study found that a library copy displaced sales of the title in the municipality by approximately 0.24 copies per month for the top 1/6 popular books and 0.52 copies for bestsellers. Various robustness checks, including instrumental variable estimation, were consistent with the baseline results; thus, the study confirmed displacement effects for popular books.

Keywords: Public lending right, Library, Book, Displacement effects, Japan.

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