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Fairness Ex Ante and Ex Post: Experimentally Testing Ex Post Judicial Intervention into Blockbuster Deals
Author(s) -
Engel Christoph,
Kurschilgen Michael
Publication year - 2011
Publication title -
journal of empirical legal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.529
H-Index - 24
eISSN - 1740-1461
pISSN - 1740-1453
DOI - 10.1111/j.1740-1461.2011.01237.x
Subject(s) - license , ex ante , intellectual property , paragraph , commodity , business , german , distribution (mathematics) , value (mathematics) , economics , commerce , advertising , law , political science , finance , computer science , history , mathematical analysis , machine learning , mathematics , archaeology , macroeconomics
The market for copyrights is characterized by a highly skewed distribution of profits: very few movies, books, and songs generate huge profits, whereas the great bulk barely manages to recover production cost. At the moment when the owner of intellectual property grants a license (ex ante), neither party knows the true value of the traded commodity. A seemingly odd provision from German copyright law, the so‐called bestseller paragraph, stipulates that the seller of a license has a legally enforceable right to a bonus in case the work (ex post) turns out a blockbuster. We experimentally explore the effect of the provision on market prices, on the number of deals struck, and on perceived fairness. Our results show that the provision leads to lower prices for copyrights. More copyrights trade. The buyers express less ex post discontent.