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.

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.

A New Economic Analysis of the American Revolution

We offer an analysis of the American Revolution in which actors are modeled as choosing the sovereign organization that maximizes their net expected benefits. Benefits of secession derive from satisfaction of greed and settlement of grievance. Costs derive from the cost of civil war and lost benefit of Empire membership. When expected net benefits are positive for both secessionists and the Empire civil war ensues, otherwise it is settled or never begins in the first place. The novelty of our discussion is to show how diverse economic and non-economic factors (such as pamphleteering by Thomas Paine and the morale of the Revolutionary forces) can be integrated into a single economic model.

A Principal-Agent Model of Contracting in Major League Baseball

Traditional economic analyses of the reserve clause in major league baseball view it as having arisen from the superior bargaining of owners compared to players. This article interprets it instead as promoting efficient investment by teams in player development, given the transferability of player skills to other teams. Using a principal-agent framework, the article shows that limited player mobility emerges as part of the optimal contract between players (principals) and teams (agents).