Felix Oberholzer-Gee

The Effect of File Sharing on Record Sales: An Empirical Analysis

For industries ranging from software to pharmaceuticals and entertainment, there is an intense debate about the appropriate level of protection for intellectual property. The Internet provides a natural crucible to assess the implications of reduced protection because it drastically lowers the cost of copying information. In this paper, we analyze whether file sharing has reduced the legal sales of music. While this question is receiving considerable attention in academia, industry, and Congress, we are the first to study the phenomenon employing data on actual downloads of music files. We match an extensive sample of downloads to U.S. sales data for a large number of albums. To establish causality, we instrument for downloads using data on international school holidays. Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period.

File Sharing and Copyright

The advent of file sharing has considerably weakened effective copyright protection. Today, more than 60% of Internet traffic consists of consumers sharing music, movies, books, and games. Yet, despite the popularity of the new technology, file sharing has not undermined the incentives of authors to produce new works. We argue that the effect of file sharing has been muted for three reasons. (1) The cannibalization of sales that is due to file sharing is more modest than many observers assume. Empirical work suggests that in music, no more than 20% of the recent decline in sales is due to sharing. (2) File sharing increases the demand for complements to protected works, raising, for instance, the demand for concerts and concert prices. The sale of more expensive complements has added to artists’ incomes. (3) In many creative industries, monetary incentives play a reduced role in motivating authors to remain creative. Data on the supply of new works are consistent with the argument that file sharing did not discourage authors and publishers. Since the advent of file sharing, the production of music, books, and movies has increased sharply.

Rational Moralists: The Role of Fairness in Democratic Economic Politics

In this paper, we empirically test for the influence of fairness considerations on the willingness to redistribute income in private and in democratic decisions. In contrast to standard explanations of income redistribution, our theory takes into account that prices shift decisively as we move from the sphere of private contributions to politics. At the polls, it is nearly costless to observe social norms. Therefore, we expect individuals to behave more fairly in the political sphere than in the market place. We present experimental evidence which is consistent with this hypothesis. In distributive struggles, social norms moderate the inclination of human beings to behave like ‘gangsters’.

Pricing road use: politico-economic and fairness considerations

Abstract Road pricing measures are rarely adopted in practice. In this review, we ask why citizens are not more supportive of road pricing. We identify two difficulties. First, the general public is often unwilling to embrace the price system as an allocation mechanism for scarce resources. Second, for politico-economic reasons, any latent support for road pricing schemes rarely translates into actual policy-making. Based on our analysis, we outline components of a road pricing policy that might receive greater electoral support.

Fair siting procedures: An empirical analysis of their importance and characteristics

This article analyzes the reasons why individuals oppose the siting of nuclear waste repositories close to their hometowns. In a simple model based on survey data, we show that the willingness to accept such facilities largely depends on economic criteria, namely expected economic impacts and risk estimates. However, the predictive power of such a model is improved by focusing not only on the consequences-as economic models typically do-but also on the procedural aspects. We show that acceptable siting rules contribute positively to the willingness of local residents to host a noxious facility. Acceptable rules, it is found, are essentially fair rules.

Fairness and competence in democratic decisions

The price system is generally thought to be the epitome of efficiency. In some cases, however, lotteries are preferred to the market as a social decision-making system for reasons of fairness. As recent research has shown, neither procedure is always well accepted among the general population. We analyze the social acceptability of both mechanisms and apply our framework to the allocation of social burdens, namely the siting of nuclear waste facilities. Lotteries are only acceptable if they are applied to a set of efficient options. The market is accepted if the production of fairness precedes the use of prices.

Strength in Numbers: Group Size and Political Mobilization*

An important result in interest group theory and political economy is that small groups are more influential than their size would lead us to expect. In this study, we document that the opposite holds for political mobilization. Citizens are more likely to participate in elections if they belong to large groups. We present evidence that both the absolute size of groups and their population share influence individual participation decisions. The link between group size and political mobilization is in part due to the structure of media markets. Candidates find it easier to direct campaign messages at larger groups because many existing media outlets cater to them.

Strategic Management of Intellectual Property: An Integrated Approach:

In many organizations, the R&D, strategy, and legal functions are poorly integrated. As a consequence, firms miss opportunities to create and exploit the value of intellectual property. Functional silos are one reason for the lack of integration. More important, however, is the lack of a common framework and even language that would allow engineers, lawyers, and business executives to manage IP assets better. This article provides such a framework. There is no one best way to manage IP and many managers overestimate the attractiveness of using IP to exert market power. Rather, the value of the various means to protect and benefit from IP depends on firm strategy, the competitive landscape, and the rapidly changing contours of intellectual property law.

A Market for Time Fairness and Efficiency in Waiting Lines

In situations of excess demand, many firms use waiting lists to allocate products and services among their customers. The resulting allocation is likely to be inefficient, creating opportunities for Pareto improving trades among those who are waiting in line. Yet, in the queuing context, the trading of places is rare and inefficiencies often persist over time. In this paper, I report the results of a field experiment which allows randomly selected customers to earn up to

Pay for Performance: Motivation and Selection Effects

10 for letting a stranger cut in line. The higher the offer, the more likely it is that individuals let someone cut in. But while a majority agrees to wait longer, only a small minority accepts the monetary reward. Trading in this market is constrained by multiple social concerns. The obligation not to exploit situations of excess demand and efficiency considerations influence the willingness to let a stranger jump the queue.