nep-cul New Economics Papers
on Cultural Economics
Issue of 2010‒09‒03
one paper chosen by
Roberto Zanola
University Amedeo Avogadro

  1. Vertically Related Markets of Collective Licensing of Differentiated Copyrights with Indirect Network Effects By Tim Paul Thomes

  1. By: Tim Paul Thomes (School of Economics and Business Administration, Friedrich Schiller University Jena)
    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.
    Keywords: Vertical restraints, Indirect network effects, Copyright enforcement, Performing rights organizations, Music industry
    JEL: D43 L13 L44 L82
    Date: 2010–08–24

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