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The Economics of Copyright Levies on Hardware

Peer Reviewed Article
Victor Ginsburgh, Patrick Legros
Review of Economic Research on Copyright Issues, Volume 10, Issue 1, 2013, 20-35

(Winner of 2013 RERCI Best paper)

The fight against illegal music downloading has taken many forms. Beside legal prosecution (Hadopi in France, for example), many countries have chosen to tax blank tapes and CDs, both to reduce their use for illegal copying, but also to redistribute the proceeds to content providers. This has become less effective, since now illegal copying is stored on hardware devices, such as smartphones, computers, MP3 players, and external hard disks. We provide an economic analysis of the effects of copyright levies on hardware used to access original content. A first effect is to decrease the consumption of both illegal and legal content. We show that in a static model, content providers can hardly be compensated, and therefore are made worse off by the levy. We also consider a dynamic model where current sales contribute to the reputation of the content provider, and to his future revenues. A levy on hardware tends to penalise `young’ content providers in terms of reputation acquisition.

 

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"Essential Patents", FRAND Royalties, and Technological Standards

Peer Reviewed Article
Mathias Dewatripont, Patrick Legros
Journal of Industrial Economics, Volume 61, Issue 4, 2013, 913-937

Standard Setting Organizations have developed FRAND agreements in order to prevent firms from holding-up other participants once a standard is created. We analyze here the consequences of such agreements — in particular the requirements of fairness and non-discrimination — for the creation of technological standards that require the participation of existing patent holders. We abandon the usual assumption that patents bring known benefits to the industry or that their benefits are known to all parties. When royalty payments are increasing in one’s patent portfolio, as is implicitly the case in FRAND agreements, private information about the quality of patents leads to a variety of distortions, in particular the incentives of firms to “pad” by contributing patents that are `inessential’ for the given standard, a phenomenon that seems to be widespread. Several results emerge from the analysis: (i) the number of inessential patents co-varies positively with the number of essential patents; (ii) there is over-investment relative to the second-best, that is when padding cannot be avoided and (iii) the threat of disputes reduces incentives to pad but at the cost of lower production of strong patents; (iv) mitigating this undesirable side-effect calls for a simultaneous increase in the cost of padding, through a better filtering of patent applications.

 

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Introduction to the Symposium on Intellectual Property and Innovation

Editorial Introduction
Patrick Legros
Journal of Industrial Economics, Volume 58, Issue 2, June 2010, 215-221

Editorial introduction for a special issue of Journal of Industrial Economics.

 

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Hold-up sur les brevets

Newspaper Article
Mathias Dewatripont, Patrick Legros
La Chronique d'ECORE, L'Echo, 11 au 13 Octobre 2008

Libérer la musique sur internet

Newspaper Article
Victor Ginsburgh, Patrick Legros
L'Echo, 24-26 November

(in French)

Study on the Economic and Technical Publication Markets in Europe

Scientific Report
Mathias Dewatripont, Jean-Pierre Devroey, Pierre Dubois, Jéroöme Foncel, Victor Ginsburgh, Marc Ivaldi, Dominique Heusse, Patrick Legros, Françoise Verdooren, Alexis Walckiers
Final Report - Commissioned by Dg-Research, European Commission, January 2006

Dissemination and access to research results is a pillar in the development of the European Research Area. Aware of current public debates that reveal worries about the conditions of access and dissemination of scientific publica- tions, the European Commission’s Directorate- General for Research has commissioned a study that seeks: (i) to assess the evolution of the market for scientific publishing; and (ii) to discuss the potential desirability of European- level measures to help improve the conditions governing access to and the exchange, dissemination and archiving of scientific publications (taking into account all actors/ stakeholders of the sector).

The report builds on a voluminous existing literature. It therefore updates the “state of the art” in terms of reports, studies, surveys, and articles. It has also benefited from considerable interaction with various actors/stakeholders of the sector, policy bodies, corporate associations and interest groups. Discussion meetings took place as well as participation and exchange in scientific conferences and policy forums. Three ‘consultation days’ were also organized, where preliminary results were discussed with publisher representatives, scholarly societies, research-funding organizations, and library representatives.

The report considers the specificities of the market for current journal issues. In doing so, it discusses the broad facts about the market; it undertakes a quantitative analysis of journal prices; it discusses the implications of technological innovation on pricing strategies and the dynamics of entry; and it analyzes the implication of these developments in terms of competition policy.

It also discusses the various alternatives for disseminating and accessing scientific publica- tions. This includes the question of access to research results on individual web pages or in public repositories, the development of open- access journals as well as other alternatives, such as pay-per-view, the question of the long- term preservation of electronic publications and the use of standards to ensure interopera- bility between systems.

The attention of public decision makers is required for two reasons. First it is well-establi- shed that science has a key role in fostering economic growth, and because scientific journals are an essential means of disseminating new knowledge in the academic community but also beyond. Secondly, much of scientific activity is publicly funded: the output of research is typically not bought by journals but ‘donated’ by publicly-funded researchers; so are to a large extent refereeing services for the evaluation of research; and finally, journals are bought by publicly-funded researchers or, more often now, by publicly-funded libraries. It is therefore crucial for public authorities to form a view on the relative efficiency of the scientific publication process.

Copyright, Art and the Internet: Blessing the Curse

Book Chapter
Patrick Legros
Handbook of the Economics of Art and Culture, edited by Victor Ginsburgh and David Throsby, Elsevier, Volume 1, September 2006, Chapter 9,

The new technologies of digitalization and the internet threaten the market positions of artists and intermediaries. Artists because the technology of production of works may be readily accessible and craftsmanship may no longer be a defining characteristic of art. Intermediaries because their rents are linked to entry barriers in the distribution market. This curse of new technologies may be a blessing in disguise since it also increases the possibilities of production, of distribution, and the emergence of new works of art. The system of intellectual protection gives market power to artists and the economic literature has analyzed the tradeoff between the dynamic inefficiency generated by this market power and the need to preserve the incentives for creation. We review this literature and some of its recent applications to artistic and more generally intellectual creation. Even if artists can capture perfectly the market value of the future home production by consumers they may favor a strong copyright regime that prevents consumers from using their home production. Intermediaries and artists may want to limit competition in order to increase the rents brought by the indivisibility of creative ideas. The preferences of artists for strong or weaker form, e.g., licensing of rights for home production, of copyright may be related to their creativity keywords copyright appropriability licensing intellectual protection internet.

 

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