Does Intellectual Property Protection Raise the Price or Increase Quantity?

Intellectual Property and Copyright and Trademark

Article Snapshot


Stan Liebowitz


Searle Research Symposium on Property Rights and Innovation Research Paper, Fall 2008


This paper looks at how copyright affects the prices of books.

Policy Relevance

There is little evidence that copyright raises the price of books and some evidence that it lowers book prices. Any price increases are small, and will harm consumers less than copyright alternatives that rely on taxation.

Main Points

  • Scholars assume that copyright law gives a monopoly to the authors of created works, benefitting consumers by encouraging more creativity, but harming them by raising prices.

  • This study of book prices comparing the prices of copyrighted and uncopyrighted works shows that, if we examine the data as would be typical for most economic studies, copyright either does not raise the price of books at all.

  • The best explanation for why copyright would not raise prices is uniform price theory.
    • Real-world entertainment prices of movies and books seem to be fairly uniform.
    • Copyright lets each publisher sell more copies of each title, so publishers can still recoup their costs even by selling at a lower price.
    • If this is the best explanation of the data, then strong copyright always benefits consumers.

  • If we weight the data to give greater weight to best-sellers, copyright seems to raise the price by 14.5%.
    • Examining industry profits shows that most of this extra revenue is passed from publishers to authors.

  • Some argue that copyright should be replaced by a system in which taxes are collected on created works, and then revenues are redistributed to creators by an organization like a performing rights society.
    • This type of system would almost certainly cost consumers far more than a copyright system, because of administrative costs and other problems.

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