Copying, superstars, and artistic creation

We provide a new perspective on the impact of unauthorized copying and copy levies on artistic creation. Our analysis emphasizes three aspects of artistic markets: the predominance of superstars, the important role of promotion expenditures, and the difficulties of talent-sorting. In the short run, piracy reduces superstars’ earnings and market share and increases the number of niche and young artists. In the long run, copying can also have a positive effect on high-quality artistic creation by helping more young artists start their careers, which increases the number of highly talented artists in subsequent periods. The long-term impact of levies on copy equipment on artistic creation depends on whether their yields primarily accrue to superstars who already receive rents or are allocated to help young artists.     

Technological Diffusion, Convergence, and Growth

We construct a model that combines elements of endogenousgrowth with the convergence implications of the neoclassicalgrowth model. In the long run, the world growth rate is drivenby discoveries in the technologically leading economies. Followersconverge toward the leaders because copying is cheaper than innovationover some range. A tendency for copying costs to increase reducesfollowers growth rates and thereby generates a pattern of conditionalconvergence. We discuss how countries are selected to be technologicalleaders, and we assess welfare implications. Poorly defined intellectualproperty rights imply that leaders have insufficient incentiveto invent and followers have excessive incentive to copy.     

Price discrimination of digital content

This paper considers the simplest DRM, which permits either free or no copying, with incomplete information about the type of consumer. We first obtain results concerning separability of consumers in a general situation, and show that there is a critical type of consumer. A higher utility type selects a menu of free copying whereas a lower one chooses not to copy. In a two-type model we indicate that optimal pricing for a producer is different from that under two-part tariffs. This price strategy brings about greater profits and social welfare if, and only if, self-production is more efficient than that of a producer.     

Copy-protection policies and profitability

This paper examines the publisher's optimal copy-protection policies. Even if copying is more cost-efficient than producing an original, private copying harms the publisher for two reasons. First, the copy users’ contribution to the original's price is too small, and second, there is a time lag between providing the original and distributing copies. If and only if both production costs of copies and institutional costs of the distribution of copies are sufficiently small; does controlling the number of copies benefit the publisher. However, the publisher's optimal number of copies is too low from a social welfare perspective.     

Copyright enforcement and product quality signaling in markets for computer software

This paper considers the impact of consumer copying of computer software when there is asymmetric information about product quality. In particular, the paper: (1) examines how the presence of copying can enhance the feasibility of production of high quality software when quality is a priori unknown to consumers and (2) explores the novel possibility that a software producer can signal product quality via its copyright enforcement decision. Under certain conditions, when there is asymmetric information about product quality, providers of high quality software can be made strictly better off with less than full copyright enforcement; in some cases, they do not produce at all in the absence of copying.     

THE EMERGENCE OF COPYING TECHNOLOGIES: WHAT HAVE WE LEARNED?

The past few decades have seen dramatic advancements in the technology of copying and the diffusion of copying technology to the general public. This paper surveys some of the recent academic literature dealing with this issue. We focus on (i) the effect of varying the extent of property rights enforcement by the government, and (ii) possible responses by producers of originals to consumers' ability to produce copies. The traditional view is that as the government increases property rights enforcement, there is a decrease in the social welfare loss due to underproduction and an increase in the social welfare loss due to under-utilization. In the first half of the paper, we show how the analyses contained in a number of recent studies throw doubt on this traditional viewpoint. In particular, varying the extent of property rights enforcement has effects that the traditional analysis ignores. As a result, the social welfare losses mentioned above can move in ways not recognized previously. The conclusion is that, contrary to what is sometimes suggested, choosing an optimal level of property rights enforcement by the government should not be viewed as a simple trade-off between these two social welfare losses. In the second half of the paper, we discuss possible market responses to consumers' ability to produce copies. Among other responses, we consider the role of price discrimination and complementary products when copying is possible.     

OPTIMAL ENFORCEMENT AND ANTI‐COPYING STRATEGIES TO COUNTER COPYRIGHT INFRINGEMENT*

In this paper we study the mix of anti‐copying investment strategies by an incumbent firm and the enforcement policies of a government that consists of monitoring and penalizing the copier to address the issue of commercial piracy. If monitoring is socially optimal then the subgame perfect equilibrium anti‐copying investment does not guarantee the prevention of copying. If not monitoring is socially optimal then the subgame perfect equilibrium anti‐copying investment may guarantee the prevention of copying.     

Agent-based modelling as a foundation for big data

In this article, we propose a process-based definition of big data, as opposed to the size- and technology-based definitions. We argue that big data should be perceived as a continuous, unstructured and unprocessed dynamics of primitives, rather than as points (snapshots) or summaries (aggregates) of an underlying phenomenon. Given this, we show that big data can be generated through agent-based models but not by equation-based models. Though statistical and machine learning tools can be used to analyse big data, they do not constitute a big data-generation mechanism. Furthermore, agent-based models can aid in evaluating the quality (interpreted as information aggregation efficiency) of big data. Based on this, we argue that agent-based modelling can serve as a possible foundation for big data. We substantiate this interpretation through some pioneering studies from the 1980s on swarm intelligence and several prototypical agent-based models developed around the 2000s.     

The Right Choice at the Right Time: A Herding Experiment in Endogenous Time

Herding describes the phenomenon in decision-making where an economic agent disregards his own private information to follow the actions of his predecessors as in Banerjee (1992). With later decision-makers simply copying earlier decisions their private information cannot be inferred by other decision-makers and will be forever lost. There is some experimental evidence on simple sequential herding of this type in the literature, notably Anderson and Holt (1997). This paper differs by allowing subjects to delay their decision-making in order to benefit from observing others' actions as in more recent herding models such as Chamley and Gale (1994). The results in this paper suggest that subjects will indeed delay when their private information is not sufficiently strong. Despite this ability to wait, as predicted in the theoretical literature, cascades remained ubiquitous and more worrying still, reverse-cascades occurred in which incorrect decisions made by early decision-makers produced informational cascades on the wrong action. In an alternative design, informing subjects that they had made incorrect choices only made matters worse as subjects moved further away from rational behavior.     

Testing volatility persistence on Markov switching stochastic volatility models

In the literature, some researchers found that the high persistence of the volatility can be caused by Markov regime switching. This concern can be reflected as a unit root problem on the basis of Markov switching models. In this paper, our main purpose is to provide a Bayesian unit root testing approach for Markov switching stochastic volatility (MSSV) models. We illustrate the developed approach using S&P 500 daily return covering the subprime crisis started in 2008.