Optimal Copyright Length And Ex Post Investment: A Mickey Mouse Approach
This paper formally explores the optimal length of copyright protection when the value of an intellectual work changes over time due to depreciation and value-enhancing ex-post investments. The first main finding is that, in the case of a single project, granting infinitely-lived copyright protection maximizes social welfare when the return on ex-post investments is high relative to the return on the initial investment. We also provide simulation results of our model for the case of multiple heterogeneous projects that show how social welfare varies with the length of copyright protection and the returns on initial and ex-post investments. We then consider what our framework says concerning the social-welfare effects of the 1998 Copyright Term Extension Act. Here we show that, depending on the importance of ex-post investments, the act may have either increased or decreased social welfare. Our final analysis considers the social-welfare implications of replacing fixed-length copyright protection with Landes and Posner's (2003) idea of indefinitely-renewable copyright protection. We find that implementing indefinitely-renewable copyright protection frequently increases social welfare provided the returns on ex-post investments are sufficiently large. We also provide a brief history of Disney's Mickey Mouse and argue that the history of that character matches quite well with the predictions of our theoretical approach.
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Volume (Year): 51 (2013)
Issue (Month): 2 (04)
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- Stan J. Liebowitz & Stephen E. Margolis, 2005. "Seventeen Famous Economists Weigh In On Copyright: The Role Of Theory, Empirics, And Network Effects," Law and Economics 0505003, EconWPA.
- Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-46, April.
- Richard A. Posner, 2005. "Intellectual Property: The Law and Economics Approach," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 57-73, Spring.
- Hal R. Varian, 2005. "Copying and Copyright," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 121-138, Spring.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Scherer, F M, 1972. "Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review, American Economic Association, vol. 62(3), pages 422-27, June.
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