| Abstract: |
This paper presents a theory of vertically interrelated markets of identical
fixed size under implementation of positive indirect network effects. By
introducing two Salop circles, a two-sided market model is provided, where
intermediaries of differentiated copyrights for intellectual property, like
performing rights organizations or publishers, compete as oligopsonists for
owners of the intellectual property and as oligopolists for the users of their
blanket licenses. We demonstrate, that an increase in competition benefits
either license users or copyright owners or harms both groups. Moreover, if
license users gain from an increased market entry, the owners of the
intellectual property have to incur losses and vice versa. |