Author Question: Why are music, television, and movie companies concerned about their products being posted to ... (Read 45 times)

FButt · **on:** Jun 29, 2018

Why are music, television, and movie companies concerned about their products being posted to Internet Web sites such as YouTube?

What will be an ideal response?

Question 2

How does private information create adverse selection and moral hazard?

What will be an ideal response?

aliotak · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

These companies believe that their intellectual property rights are being violated when the unauthorized use of their material appears on these Web sites, and this reduces their ability to sell CDs and DVDs of this material.

Answer to Question 2

Both moral hazard and adverse selection are the result of private information. Moral hazard occurs when, after an agreement has been reached, one of the parties to the agreement has the incentive to gain additional benefits at the expense of the other party. Adverse selection refers to people who accept certain contracts and have private information that allows them to benefit from the contract while harming the other party. Both moral hazard and adverse selection can affect negatively the way in which markets function.