Market Entry and the Proper Scope of Copyright

Abstract

The contribution of this paper is to recast the problem of copyright scope as a problem of market entry that has been studied by economic theorists. The creation of a derivative work, for example, entails the entry of a new product into the marketplace that competes with existing, or incumbent, products. Entry has two obvious effects: expanding the options available to consumers at potentially lower prices and reducing the rents earned by incumbent suppliers. The first effect parallels copyright's concern with access; the second, copyright's concern with incentives. The economic theory of entry shows that under different conditions, market entry may be greater than or less than the socially desirable level of entry. Recognizing the relationship between market conditions and the desirability of entry sheds light on the design of the optimal scope of copyright.

Keywords: Law & Economics, Copyright, Intellectual Property, Industrial Organization