Is the Copyright Monopoly a Best-Selling Fiction?

Intellectual Property and Copyright and Trademark

Article Snapshot


Stan Liebowitz


Working Paper, September 2008


This paper attempts to determine the impact of copyright on book prices.

Policy Relevance

Issues of copyright length and whether copyright is worth having at all have been heatedly dispuuted in recent years. The "harm" from the copyright "monopoly" is at the center of economic arguments against copyright. This paper is the first to attempt to measure this "harm."

Main Points

  • Recent prices of best-sellers written between 1895 and 1940, some with copyright and some without, were compared in a multiple regression analysis in order to determine the impact of copyright.

  • One set of empirical findings based on typical (unweighted) regressions indicate that the prices of copyrighted works do not appear to be higher than the prices of non-copyrighted works.
    • The seemingly impossible result of paying the author when price is at the competitive level is explained by appealing to the nascent literature on uniform pricing. When the retail price is independent of demand, competition is described by quantity changes.  Copyright allows the publisher to sell a greater quantity and pay the author with the profits. In this world, increases in copyright unambiguously increase welfare.

  • Another set of findings, based upon giving greater weights to books that have greater unit sales, implies that copyright might raise price by up to 14.5%.
    • In this case, authors appear to receive all the industry rents since the price differential is similar to author royalty rates.
    • Liebowitz calculates a range of deadweight losses based upon seemingly reasonable market assumptions and find the size of the deadweight loss is much less than the deadweight losses from a leading alternative system that has been proposed (e.g., by the Berkman Center) for distributing creative works.

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