Coase Theorem Hypo

  1. Consider how to apply the Coase Theorem and the casebook discussion of it to intellectual property, in particular, to music subject to copyright under existing law.
  2. Suppose there were no intellectual property protection, either because the Copyright Act is repealed insofar as it applies to recorded music, or because technology makes copyrights unenforceable. What is the equivalent of the bargaining in Coase's polluting bicycle factory example? Do people who want to listen to music have any incentive to make payments to those who might produce it?
  3. Suppose there is strong intellectual property protection, backed up perhaps by strong technological protections. Is there any incentive to engage in Coasian bargaining then? What form might the bargaining take?
  4. Identify as many of the transaction costs affecting Coasian bargainning over intellectual property in music as you can. What alternatives do the parties and the law have to reduce these transaction costs and facilitate bargaining? Consider the detailed discussion of transaction costs in the casebook on page 276 and try to identify applications in the music/IP context.