On Wed, 3 Jul 2002, R. A. Hettinga wrote:
For me, this is all about Coase's theorem, transaction cost, Coase's observation that you can't have a market without property,
Quite. Coase's reasoning demonstrated that any initial allocation of property rights is equivalent (both in the allocative and distributive senses) when transaction costs amount to nil. So, if we look at the distribution side of the information industry, you're absolutely right. The smaller the transaction costs the better -- rivalry applies to any particular copy, as it does to services involved disseminating the bits. Any trades required are bilateral, competition does its job and everything is just dandy. But if we look at the creation end, that's a different story entirely. Anyone eventually receiving a copy will benefit roughly equally from the efforts of the artist/author. If copying and distribution are exceedingly cheap, as we'd expect them to be in the future, the number of people for whom acquiring the information would be profitable easily grows to the tens or hundreds of millions. Since any copy released will be widely disseminated, the deal between the original author and the public with an interest in his work will be multilateral in the extreme. It cannot be reduced into a bunch of bilateral trades as in the case of private commerce. This means that we get sizable transaction costs. IP is there to force the economy into something approximating the conventional, material one, and so internalize externality otherwise generated. (No, it does not solve the problem. But limited term copyright could still strike a near-optimal bargain.) If something, Coase's original point is behind copyright, not its antithesis. That's why I rarely use economic reasoning to argue for IP abolition, even when I consider IP a bad idea. Sampo Syreeni, aka decoy - mailto:decoy@iki.fi, tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2