Fairness Ex Ante & Ex Post – An Experimental Test of the German “Bestseller Paragraph”
AbstractThe market for copyrights is characterised by a highly skewed distribution of profits: very few movies, books and songs generate huge profits, whereas the great bulk barely manages to recover production cost. At the moment when the owner of intellectual property grants a licence (“ex ante”), neither party knows the true value of the traded commodity. A seemingly odd provision from German copyright law, the so-called “bestseller paragraph”, stipulates that the seller of a licence has a legally enforceable right to a bonus in case the work (“ex post”) turns out a blockbuster. We experimentally explore the effect of the provision on market prices, on the number of deals struck and on perceived fairness. Our results show that the provision leads to lower prices for copyrights. More copyrights trade. The buyers express less ex-post discontent.
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Bibliographic InfoPaper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2010_29.
Date of creation: Jun 2010
Date of revision: Nov 2010
Copyrights; Fairness; Experiment;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-10 (All new papers)
- NEP-CBE-2010-07-10 (Cognitive & Behavioural Economics)
- NEP-CUL-2010-07-10 (Cultural Economics)
- NEP-IPR-2010-07-10 (Intellectual Property Rights)
- NEP-REG-2010-07-10 (Regulation)
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