The economics of copying and counterfeiting

/ edited by Gianfranco Mossetto, Marilena Vecco. - Milano : Angeli, ©2004. - 256 p. ; 23 cm.
This book is a collection of the original contributions, presented at the international workshop on The Economics of Copying and Counterfeiting held by ICARE, the International Center for Art Economics of the University Ca' Foscari of Venice, on December 3-4th 1998. The contributions are aimed at an extensive analysis of the economics of artistic fakes from the point of view of economists, sociologists and law experts. Some are in the nature of surveys, others are aimed at building models of market behaviour while others are case studies. A cultural history of copies and forgery can be seen as part of the history of taste. It enables us to perceive the evolution of the copy and forgery market along with that of the artistic market as a whole. The economics of art fakes has been analysed here focusing on four different aspects: theory and history, market and pricing, law enforcement and market regulation.

Indice

INTRODUCTION by Gianfranco Mossetto and Marilena Vecco 11
SECTION I - THEORY AND HISTORY 15
1. Frey Bruno S., Some Considerations on Fakes in Art. An Economic View 17
1.1 A Widespread Activity 17
1.2 Dominant Views on Fakes 18
1.2.1 The Legal Position 18
1.2.2 The Art Historic Position 20
1.3 Beneficial Aspects of Imitations 21
1.4 Harmful Aspects of Imitations 23
1.4.1 Demand 23
1.4.2 Supply 24
1.5 Quotations as Solutions? 25
References 28
2. Benhamou Françoise and Ginsburgh Victor, Is There a Market for Copies? 30
2.1 Introduction 30
2.2 Forgeries, Copies and Reproductions 32
2.3 Artists, Consumers and Markets 34
2.3.1 Artists and their Patrons 34
2.3.2 Markets 37
2.4 Copies and the Law 41
2.4.1 The Legal Definition of Originality 41
2.4.2 Public Domain versus Non Public Domain 43
2.4.3 Copies as Double and Copyrightable Goods 44
2.5 Copies and Art Historians 46
2.5.1 Exhibitions and Museums 47
2.6 Concluding Comments 48
References 49
3. Mossetto Gianfranco, The Economics of Counterfeiting 52
3.1 Introduction 52
3.2 The Importance of Being Conterfeited: The "Cuckoo Model" 53
3.3 Some Economics of Forgery 54
3.4 From Cuckoo to "Pedlar" 58
3.5 The "Breath of the Artisf' Model 64
3.6 Conclusions 70
References 73
4. Corazza Marco and Funari Stefania, Quantitative Dynamics for the Pedlar Model 74
4.1 Introduction 74
4.2 Dynamic Behaviour 75
4.2.1 Dynamic Demand Function 76
4.2.2 The Monopolist's Behaviour 77
4.2.3 The Counterfeiter's Behaviour 79
4.3 The Model 81
4.3.1 Homogeneous Solution 82
4.3.2 Particular Solution 83
4.4 Stability Conditions 84
4.5 Concluding Remarks and Open Items 89
References 90
SECTION II - MARKET AND PRICING 91
5. Lazzaro Elisabetta, Moureau Nathalie and Sagot-Duvaroux Dorninique, From the Market of Copies to the Market of Fakes: Adverse Selection and Moral Hazard in the Market of Paintings 93
5.1 Introduction 93
5.2 Definitions of Copies 95
5.3 Case 1: A Copy sold as a Copy 98
5.3.1 Copies, a Way to diffuse an Original 98
5.3.2 Copies, a Vertical Differentiation of the Market 98
5.4 Case 2: From the Market of Copies to the Market of Fakes. A Copy sold as an Original 103
5.4.1 Causes for the Appearance of Fakes 103
5.4.2 Economic Consequences of Fakes on the Market 105
5.4.2.1 How can the Adverse Selection Problem be avoided? 106
5.4.3 Certificates and Warranties 107
5.4.4 Descriptive Catalogue 108
5.4.5 Legal Protection 110
5.5 Case 3: An Original sold as a Copy 112
5.6 Case 4: Nobody knows 115
5.7 Concluding Remarks 116
References 117
6. Frank Björn, Art Price Research for Fakes and Imitations 119
6.1 Introduction 119
6.2 Prices for Fakes: Some Econometric Evidence 120
6.2.1 Background and Data 120
6.2.2 Results 124
6.3 Some Lessons from Imitations 128
6.4 Final Remarks 130
References 131
SECTION III - LAW ENFORCEMENT 133
7. Ricolfi Marco, The Wars on Piracy and their Dilemmas 135
7.1 Introduction 135
7.2 The Piracy Inducement Dilemma 136
7.3 The Downstream Users Dilemma 140
7.4 The Multilateral Monopoly Dilemma 142
References 145
8. Silva Francesco and Ramello Giovanni B., Sound Recording Market. The Ambiguous Case of Copyright and Piracy 146
8.1 Introduction 146
8.2 The Legal Industry: Main Features 149
 
8.2.1 Growth and Concentration 149
8.2.2 Prices 152
8.2.3 Quality 153
8.3 The Unauthorised Phonographic Market 154
8.3.1 Phenomena 154
8.3.2 Size and Spread 155
8.4 The Structure of the Legal Market: A Differentiated Oligopoly 158
8.4.1 Horizontal Product Differentiation 158
8.4.2 Vertical Product Differentiation 160
8.4.2.1 Concentration 160
8.4.2.2 Price Competition 162
8.5 Interactions Between Legal and Unauthorised Sound Reproduction 165
8.6 Conclusions 171
References 173
SECTION IV - MARKET REGULATION 177
9. Hutter Michael, Economic Aspects of Fakes 179
9.1 Introduction 179
9.2 Three Models in a Monopoly Framework 181
9.3 Two Views of a Pollution Framework 183
9.4 One Money Framework 185
9.5 The Remark on Regulation 185
References 186
10. Benghozi Pierre-Jean and Santagata Walter, Counterfeiting Practices and Illegal Markets in the Design Based Industry 187
10.1 Introduction 187
10.2 Design and Piracy 188
10.3 Piracy and Economic Incentives 190
10.3.1 Counterfeiting Design Based Products 190
10.3.2 The Entrepreneur's Economic Incentives to Piracy 192
10.3.3 A Taxonomy of Piracy Markets 194
10.4 Illegal Economic Organisation of Design Based Market 195
10.4.1 Illegal Market and Economic Structure 196
10.4.2 Legal Market, Illegal Market, Criminal Market 197
10.5 Policy Regulation within the Market of Pirated Products 199
10.5.1 Enforcing Intellectual Property 199
10.5.1.1 An Economic Dilemma 199
10.5.2 Implementing Enforcement 203
10.5.2.1 Cultural Limits of International Protection 203
10.5.2.2. Private Devices of Protection 204
10.6 Conclusion 206
References 207
11. Burke Andrew E., Economic Objectives of Copyright and the Efficiency of Legal Practice: An Analysis of BSkyB Ltd and Sky Television Ltd v. the PRS Ltd 209
11.1 Introduction 209
11.2 The Economics and Law of Copyright 211
11.2.1 The Economic Objective 211
11.2.2 The Evolution of Copyright Law 212
11.2.2.1 Creating the Right: Valid Markets for Copyright 212
11.2.2.2 Regulating Copyright: the Financial Relationship between Creators and Copyright Users 213
11.3 The Ruling 216
11.3.1 The Dispute 216
11.3.2 The Relevant Market 217
11.3.3 The Impact of Legal Design on Regulatory Efficiency 219
11.4 The Economic Consequences of Adopting the Tribunal's Pricing Scheme 224
11.4.1 Competition among Composers 224
11.4.2 Sharing Risk 225
11.4.3 Productive Competition between Television Stations 227
11.4.4 Destructive Competition between Television Stations 227
11.4.5 Allocative Inefficiency in the Market for Sky Subscriptions 229
11.4.5.1 Case 1: The Tribunal's Pricing Scheme 230
11.4.5.2 Case 2: Revenue based Tariffs 231
11.4.6 Allocative Inefficiency in the Intermediate Broadcast Market for Music 232
11.5 Conclusion 234
References 234
12. Greffe Xavier, Intellectual Property Rights in the Digital Age 235
12.1 Introduction 235
12.2 The Predigital Debate 236
12.2.1 New Complementary Debates 238
12.2.1.1 Moral Rights vs Economic Rights? 238
12.2.1.2. Do IPR have to be internationally extended? 239
12.2.1.3 Individualistic or Collective Management of IPR? 239
12.3 The Challenge of Virtuality 240
12.4 Dramatic Changes for Intellectual Property Rights 243
12.4.1 Monetarisation of Moral Rights 243
12.4.2 An Increasing Collective Management of IPR 245
12.4.3 Joint Ventures or IPR Systems? 246
12.5 New Public Policy Choices 249
References 255