Reward Theory (Copyright) Theory...January 21, 2010 © 2008, William Fisher. This work is licensed...

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Reward Theory (Copyright)

William Fisher September 15, 2009

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

Marginal Cost

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

Marginal Cost

Willingness and ability to pay of consumer X

P(X)

X

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

Willingness and ability to pay of consumer Y

P(X)

X

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

Willingness and ability to pay of consumer Z

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

Aggregate Consumer Demand

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

P(X)

X

P(Z)

Z Q

In the absence of copyright, copying and competition will drive the price down close to marginal cost

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

In the absence of copyright, copying and competition will drive the price down close to marginal cost

P(X)

X

P(Z)

Z

Resultant Consumer Surplus

Q

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

P(X)

X

P(Z)

Z Q

In the absence of copyright, copying and competition will drive the price down close to marginal cost

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

P(X)

X

P(Z)

Z

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

P(X)

X

P(Z)

Z

Profit-Maximizing Behavior by a Copyright Owner who can engage in perfect price discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

P(X)

X

P(Z)

Z

Profit-Maximizing Behavior by a Copyright Owner who can engage in perfect price discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Conditions Created by the Grant of a Copyright

$

Quantity

P(Y)

Y

Marginal Cost

Profit-Maximizing Behavior by a Copyright Owner who can engage in perfect price discrimination

P(X)

X

P(Z)

Z Profit-maximizing output

“Monopoly Profits”

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

$

Quantity

C G

H

Marginal Cost

O

A

I

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

Revenues

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

Costs

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

Profits

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

Revenue loss

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

Revenue loss

Revenue gain

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

Profits

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

r

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

r

w

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

r

w

Revenue loss

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

r

w

Revenue loss

Revenue gain

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

p

u

q

v

r

w

Profit

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

O

A

I

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

C G

H

Marginal Cost

Marginal Revenue

O

A

I

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

B

C

D

E

F

G

H

Marginal Cost

Marginal Revenue

O

A

I

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

B

C

D

E

F

G

H

Marginal Cost

Profit-maximizing output

Prof

it-m

axim

izin

g pr

ice

Marginal Revenue

O

A

I

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

$

Quantity

B

C

D

E

F

G

H

Marginal Cost

Profit-maximizing output

Prof

it-m

axim

izin

g pr

ice

Monopoly Profits

Marginal Revenue

O

A

I

1

Profit-Maximizing Behavior by a Copyright Owner in the absence of Price Discrimination

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Effects of Profit-Maximizing Behavior by a Copyright Owner

$

Quantity

B

C

D

E

F

G

H

Marginal Cost

Profit-maximizing output

Prof

it-m

axim

izin

g pr

ice

Monopoly Profits

O

A

I

1

2

Consumer Surplus

January 21, 2010

© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.

Economic Effects of Profit-Maximizing Behavior by a Copyright Owner

$

Quantity

B

C

D

E

F

G

H

Marginal Cost

Profit-maximizing output

Prof

it-m

axim

izin

g pr

ice

Monopoly Profits

O

A

I

1

2

3

Consumer Surplus

Deadweight Loss (foregone consumer surplus)

E