Economic theory in Copyright v the nature of property in Copyright
2014 International Workshop
Intellectual and Industrial ‘Property’: Bridging Historical, Philosophical and Policy Concerns
National Documentation Centre of Greece
Athens, February 11-12, 2014
By
Marinos Papadopoulos
Attorney-at-Law J.D., M.Sc., Ph.D. (cand.)
PATSIS, PAPADOPOULOS, KAPONI & ASSOCIATES (Attorneys-at-Law)
Founding Member & Member of BoD of Open Knowledge Foundation Greece
Legal Lead Creative Commons Greece

Law & Economics
 The roots of Law and Economics can be found in the 18 th
century in the writings of Adam Smith, Cesare Beccaria,
Marquis de Condorcet, and Jeremy Bentham.
 As of 1960s Law and Economics has emerged as a
significant branch in the legal theory with the seminal work of
Ronald Coase, the 1991 Nobel Prize Laureate in Economics.
Ronald
Coase
Jeremy
Bentham
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Law & Economics
 The economic rational of Copyright is considered the
principal justification for it in the U.S. legal doctrine.
 In Europe, wherein Copyright is viewed as protecting
a set of natural entitlements of authors, economic
arguments of Copyright seem to play a significant role.
 The European and U.S. rationales on Copyright are
coming closer together as a result of the rise of
economic arguments in European Copyright doctrine.
 The European Commission through most of its
Directives on Copyright has focused on facilitating an
internal market and on advancing the Community’s
economic goals.
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Law & Economics v Copyright Law
 Copyright’s economics press for changes in
Copyright legislation and question core meanings of
traditional Copyright notions such as the nature of
property in Copyright law.
 Economic theory that considers the status quo and
trends on the Internet and especially the public good
nature that copyrighted works acquire when they
become available online is the cause for groundbreaking reconsideration in the discipline of Copyright
law.
 The incentives paradigm for Copyright
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Non-excludability
 A good is non-excludable when once it is produced
online it is impossible to exclude an individual from
using that good even if he/she does not contribute to
the cost of producing it
 Non-excludability, also, occurs when the costs for
the exclusion of free-riders, a.k.a. non-payers for the
use of copyrighted work that is available online, are so
high that it would be inefficient financially to exclude
in practice
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Non-rivalry
 Non-rivalry characterizes information goods or
services as intangibles for which the consumption by
one person does not detract from the ability of others
to consume. Information goods are non-rivalrous
because they cannot be exhausted by consumption in
the online environment.
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Copyrighted works online as public goods
 The presence of these two traits, the non-rivalry and
non-excludability of copyrighted works seen as
information goods in the online environment means
that information contained in creative works available
in the Internet environment is a public good that once
it is made publicly available via the Internet, it may be
consumed by an infinite number of people, i.e. society,
in non-rival and non-excludable modus of
consumption and at almost zero marginal cost for
consumption.
Non-excludable
Copyrighted
works
online
Public
goods
Non-rival
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Deadweight loss—Allocative inefficiency
 If marginal cost is assumed to be zero or close to
zero for non-rival information goods such as
copyrighted works available on the Internet, then
property rights set by Copyright law permitting
royalties to be charged to additional consumers of
information goods—a.k.a. copyrighted works available
online—lead to an inevitable deadweight loss (allocative
inefficiency) and under-utilization of the copyrighted
work.
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Copyright & ‘The Lighthouse in Economics’
 The point Ronald Coase makes in his seminal work
titled ‘The Lighthouse in Economics,’ is important
because he demonstrated that state-granted property
rights over a given public resource serve to encourage
the private production of a public good by allowing
private entities to recover payment for the use of the
resource without necessarily entitling the right-holder
to control the resource as private property with an
exclusionary property right a.k.a. the author’s power
from excludability in Copyright.
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Coase’s Theorem & Copyright
 The application of the Coase Theorem in the case of
copyrighted works in the Internet environment posits
that Copyright law and its edifices (such as
excludability etc.) become meaningful only when there
are transaction costs online.
 In the Internet environment the excludability that
Copyright law entails should be considered as the
dominant regulatory model only where and to the
extent that other non-excludable regulatory schemes
cannot achieve the same or even better results by
generating more beneficial effects for right-holders and
society at large at the same time.
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Application of Coase’s Theorem in Copyright
 In consideration of economic theory applied to
Copyright this means that probably the excludability of
Copyright may persist in the online environment and
the Internet era in a sense of a regulatory mandate to
users to pay a levy or tax in exchange for the privilege
of unrestricted access to works online under certain
conditions such as on condition of non-commercial use
of them either in privacy or not.
It happens
today
around you!
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre

Economic theory in Copyright v the nature of property in Copyright
Thank you!
2014 Workshop with international participation
Intellectual and Industrial ‘Property’: Bridging Historical, Philosophical and Policy Concerns
National & Kapodistrian Univ ersity of Athens
Athens, February 11, 2014
Full paper @ https://uoa.academia.edu/MarinosPapadopoulos
Image by Christopher Dombres licensed with CC BY v.2.0
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Marinos Papadopoulos 2014 International Workshop @ National Documentation Centre