Copyright Royalty Regulation and Competition in the Music Retail Market
Yong Hyeon Yang
KDI Journal of Economic Policy, 2017, vol. 39, issue 1, 83-102
Price control can restore efficiency in some cases, but an uncarefully designed policy fails to restore efficiency, yields side effects, or even exacerbates efficiency losses. This paper shows that the copyright royalty rule, which takes the greater of ad valorem royalties and perunit royalties, tends to fix the prices of final goods at a specific level. Such a rule weakens competition as it prevents prices from decreasing even when market conditions change, having negative effects on social welfare as well as consumer surplus. Counterfactual analyses using estimation results in the Korean online music service industry show that firms could have profitably reduced prices if the ad valorem rule had been applied instead, although they did not have an incentive to do so under the original combination rule.
Keywords: Price Control; Copyright Royalty; Royalty Regulation; Ad valorem Rule; Per-unit Rule; Combination Rule; Online Music Service Industry (search for similar items in EconPapers)
JEL-codes: D43 L43 L51 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:zbw:kdijep:200804
Access Statistics for this article
KDI Journal of Economic Policy is currently edited by Dongseok Kim
More articles in KDI Journal of Economic Policy from Korea Development Institute (KDI) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().