Of particular note is an exploration by Rafael Rob and Joel Waldfogel (University of Pennsylvania) of the sales displacement induced by downloading, incorporating consumer valuation in dollar terms of purchased albums vs. downloaded music. In a sample of college students at four U.S. colleges, the researchers found that downloading reduces per capita expenditures by $25, but increases the amount of music each individual consumes by the equivalent of $70. Thus, among their sample group, $45 worth of music – three albums – would have otherwise been forgone.
"While perhaps paradoxical to the law-abiding citizen, illegal downloading may actually alleviate the monopoly deadweight-loss problem" write Rob and Waldfogel. "Indeed, downloading allows consumers to engage in a crude "do-it-yourself" form of price discrimination."
Stan L. Liebowitz "File Sharing: Creative Destruction or Just Plain Destruction?"
Rafael Rob and Joel Waldfogel "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students"
Alejandro Zentner "Measuring the Effect of File Sharing on Music Purchases"
Sudip Bhattacharjee, et al. "Impact of Legal Threats on Online Music Sharing Activity: An Analysis of Music Industry Legal Actions"
About the Journal of Law and Economics:
Established in 1958, the Journal of Law and Economics publishes research on a broad range of topics including the economic analysis of regulation and the behavior of regulated firms, the political economy of legislation and legislative processes, law and finance, corporate finance and governance, and industrial organization. The Journal has published some of the most influential and widely cited articles in these areas. It is an invaluable resource for academics as well as those interested in cutting-edge analysis of current public policy issues.
Last reviewed: By John M. Grohol, Psy.D. on 21 Feb 2009
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