A Guide for Students and Teachers
Edited by Richard Watt
Chapter 12: Copying and the pricing of information goods
Intellectual property of a copyrightable nature is characterised by the ease and extremely low cost with which it can be perfectly copied. Above all, in the modern environment these sorts of goods are typically produced, stored and consumed entirely in digital formats, and the technologies to reproduce digital files exactly are now standard within almost every household, at least in the developed world. The ease with which a perfect digital copy can be produced translates directly into a severe difficulty for the legal owner of the intellectual property in question to defend the market from competition from copiers, and this in turn leads society to attempt to artificially increase the costs of copying via laws (in particular, copyright law) that impose artificial costs upon copying. However, of course there exist other options available to the owner of intellectual property, outside of legal protection, that either reduce copying or its damaging effects. In this chapter we propose a simple economic model in which some of these strategies can be highlighted. First and foremost, we should differentiate between ‘copying’ and ‘piracy’. The term ‘piracy’, which refers to illegal access of some sort to a copyrighted creation, can only be understood within an environment in which legal protection of the intellectual property in question does actually exist. ‘Copying’, on the other hand, is simply the act of reproduction (whether it be a reproduction in whole or in part) of the intellectual property, whether or not this act is legal.
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