A Guide for Students and Teachers
Edited by Richard Watt
Chapter 10: Copyright collectives: some basic economic theory
Of all of the aspects of copyright that have most often come under the scrutiny of economists, at the forefront are the existence and activities of copyright collectives – groups of many individual copyright holders that join together for the purposes of exploiting their copyrights collectively (see, for the seminal literature, Hollander (1984), Besen and Kirby (1989) and Besen, Kirby and Salop (1992)). The very institution of copyright itself has often been accused of forming a monopoly since it effectively creates a barrier to entry into the market for supply of access to a particular creative work, and so it is not surprising that when many such copyright holders band together rather than competing individually, monopoly alarm bells begin to ring loud and clear! Clearly, copyright collectives are monopolies, and they do exert monopoly power. And it is well known that the exercise of monopoly power leads to what economists term ‘deadweight losses’, which are irrecoverable losses in social welfare when compared to the utopian state of perfect competition. In spite of the fears of such negative effects for social welfare, it has befallen upon economists to point out that the exploitation of copyrights collectively may actually be better for society than the alternative of individual suppliers all competing for the attention of the users of creative works.
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