An Economic Model of Fair Use

The doctrine of fair use allows unauthorized copying of original works of art, music, and literature for limited purposes like criticism, research, and education, based on the rationale that copyright holders would consent to such uses if bargaining were possible. This paper develops the first formal analysis of fair use in an effort to derive the efficient legal standard for applying the doctrine. The model interprets copies and originals as differentiated products and defines fair use as a threshold separating permissible copying from infringement. Application of the analysis to several key cases (including the recent Napster case) shows that this interpretation is consistent with actual legal reasoning. The analysis also underscores the role of technology in shaping the efficient scope of fair use.

What Is Known about Testing for Discrimination: Lessons Learned by Comparing across Different Markets

The paper provides a fairly comprehensive examination of recent empirical work on discrimination within economics. The three major analytical approaches considered are traditional regression analysis of outcomes, paired testing or audits, and finally analysis of performance where higher group performance suggests that a group has been treated disfavorably. The review covers research in the labor, credit, and consumption markets, as well as recent studies of discrimination within the legal system. The review suggests that the validity of interpreting observed racial differences as discrimination depends heavily on whether the analysis is based on a sample that is representative of a population of individuals or households or based on a sample of market transactions, as well as the analyst?s ability to control for heterogeneity within that sample. Heterogeneous firm behavior and differentiated products, such as those found in labor and housing markets, also can confound empirical analyses of discrimination by confusing the allocation of individuals across firms or products with disparate treatment or by ignoring disparate impacts that might arise based on that allocation.

An Economic Model of Fair Use

The doctrine of fair use allows limited copying of creative works based on the rationale that copyright holders would consent to such uses if bargaining were possible. This paper develops a formal model of fair use in an effort to derive the efficient legal standard for applying the doctrine. The model interprets copies and originals as differentiated products and defines fair use as a threshold separating permissible copying from infringement. The analysis highlights the role of technology in shaping the efficient standard. Discussion of several key cases illustrates the applicability of the model.