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Author Question: The Sonny Bono Copyright Term Extension Act extended the copyright terms in the U.S. by 20 years. In ... (Read 57 times)

K@

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on: Jul 1, 2018
The Sonny Bono Copyright Term Extension Act extended the copyright terms in the U.S. by 20 years. In addition, the act was applied to already existing copyrights.
 
  a. Discuss the advantages and/or disadvantages in terms of efficiency and monopoly power from the extension of the lifespan of new copyrights. In theory, what determines the optimal term of a copyright?
  b. Discuss the advantages and/or disadvantages in terms of efficiency and monopoly power from the extension of the lifespan of existing copyrights.

Question 2

Assuming a homogeneous product, the Bertrand duopoly equilibrium price is
 
  A) the same as the Cournot equilibrium price.
  B) less than the Cournot equilibrium price.
  C) greater than the Cournot equilibrium price.
  D) equal to the monopoly price.


mcni194

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Reply #1 on: Jul 1, 2018
Answer to Question 1

a. There are a number of issues students may bring up, but of importance is to recognize the tradeoff between the development of new ideas and the continuation of monopoly deadweight losses. By extending the copyright terms, artists/inventors have more incentive to develop new ideas as the monopoly profit from doing so will increase. On the other hand, extending the length does add to the deadweight loss from the monopoly. The optimal term length should equate the marginal benefits from the incentive to develop new ideas and the marginal cost of the added DWL generated from longer terms.
b. There is no efficiency gain, only added DWL. Because these copyrights are in place already for previously developed ideas, there is no benefit in terms of increasing quantity of ideas/invention. The only change is the added DWL.

Answer to Question 2

B


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