Taxing Purchases of Home Tape Recorders and Supplies to Compensate for Copyright Infringements: An Econometric Analysis of the Role of Economic and Demographic Factors

Faced with a sharp decline in sales in the early 1980's, the music industry looked for an explanation which could be converted into windfall gains for itself. The explanation proposed by the industry was increased home taping of prerecorded music. Through the introduction of federal legislation, the industry hoped to realize gains at the expense of the consumer of home taping equipment and media. The analysis presented here indicates that the independent effect of taping on prerecorded music sales may not have been as high as the recording industry has claimed, so that consumers may end up paying more than their fair share toward the windfall.