An economic model of fair use: Comment

https://doi.org/10.1016/j.infoecopol.2007.10.001Get rights and content

Abstract

We provide a correct analysis of Miceli and Adelstein [Miceli, T., Adelstein, R., 2006. An economic model of fair use. Information Economics and Policy 18, 359–373.], which studies the doctrine of fair use in copyright. We show that the optimal fair use standard is high enough to allow extensive copying in their model.

Introduction

The doctrine of fair use in copyright allows some copying of the original without deeming the copier an infringer. This doctrine is codified in the copyright law of many countries,1 and it has received renewed interest as internet technology advances.2 In a recent paper, (Miceli and Adelstein, 2006, henceforth MA) present a very interesting model of fair use. In particular, they treat the original work and copies as different varieties lying on a continuum and assume that consumers vary in their valuation of these varieties. In this context, they interpret the doctrine of fair use as a threshold separating permissible copying from infringement. They analyze the producer’s and consumers’ behavior to derive an optimal fair use standard.

Unfortunately, however, MA’s analysis is incomplete in that they fail to recognize consumers’ incentives to make permissible copies. In this short paper, we reconsider the MA model and provide a correct characterization. We conduct the analysis noting the fact that the fair use standard, even when it is set to be very low, affects the decision of every consumer, which in turn restricts monopoly power. We show that the optimal fair use standard is high enough to allow extensive copying. This is in sharp contrast to MA’s results that the optimal fair use standard does not allow extensive copying. Nonetheless, the interpretations of court decisions in MA’s Section 5 are broadly consistent with the results in this paper.

In the next section, we present a correct analysis of the model. A very brief discussion is contained in Section 3. Since our objective is only to provide a correct characterization, we do not discuss more extensively the doctrine of fair use in copyright law. Interested readers may consult MA and the references therein.

Section snippets

The model3

MA consider a model where the ‘good’ can be consumed in different varieties or versions. To capture this, they introduce a quality index z that ranges from zero to one, with z = 1 for the original. Consumers’ valuations are uniformly distributed on the unit interval. The consumer with valuation z¯∈ [0, 1] gets the gross benefit ofU(z)=tzwhenz⩽z¯,tz¯whenz>z¯,when she consumes the original or a copy of quality z. Hence, a consumer type z¯ has a marginal benefit of t up to her type but attaches no

Discussion

The current characterization of the optimal fair use standard differs from that in MA. In particular, the standard is high enough to induce the copying outcome (Regime 2). Moreover, it is always higher than the first-best level of fair use unless the dynamic incentive is binding.

We want to mention that this result is obtained in the particular model of MA; hence, the insight may not be generally applicable to the issue of fair use. Landes and Posner (2003) classify fair use into three cases.

Acknowledgements

I thank the editor and anonymous referees for helpful suggestions. This work was supported by a Korea University Grant.

References (4)

There are more references available in the full text version of this article.
View full text
Copyright © 2007 Elsevier B.V. All rights reserved.