A Handbook of Cultural Economics, Second Edition
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A Handbook of Cultural Economics, Second Edition

Edited by Ruth Towse

The second edition of this widely acclaimed and extensively cited collection of original contributions by specialist authors reflects changes in the field of cultural economics over the last eight years. Thoroughly revised chapters alongside new topics and contributors bring the Handbook up to date, taking into account new research, literature and the impact of new technologies in the creative industries.
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Chapter 8: Artists’ Rights

Michael Rushton


Michael Rushton At the foundation of the economic analysis of property and contract is the hypothesis that the common law, and other institutions, evolve to ensure that rights will be exchanged between individuals so that in the end the rights are held by those who value them the highest. The Coase (1960) theorem holds that, as long as property rights are clearly defined, and there are no transaction costs associated with their exchange, the resulting allocation of rights will be efficient and will be independent of their initial allocation. Of course, it is the existence of transaction costs that makes things interesting. When transaction costs are high, so that rights will be difficult to exchange, efficiency will be obtained only when the law awards rights initially to those who will value them most highly. In this sense the law ‘mimics’ the market. And so, in cultural economics, we look to see whether the various property rights granted to artists represent an efficient allocation. An application of this principle is in the economic analysis of the law of copyright, where efficiency dictates awards of limited rights to creators (the copyright) and users (fair use) so that aggregate wealth is maximized (Landes and Posner, 1989). For a more specific case, consider an artist creating a parody of a work. Landes (2002) and Posner (1992) claim that a transaction cost analysis would allow unlicensed use of works for parody if the target of the parody were the original work itself, since a bargain...

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