Skip to main content

Deadweight loss

Image
By
Yglesias explains the concept in the context of downloaded music:
What about the case of unauthorized downloading of music files. Consider Katy Perry’s “California Gurls”. This tune costs $1.29 on iTunes. At that price, some people will buy it. Others will refuse. You might refuse because you hate Katy Perry and hate the idea of owning one of her songs. But say you’re not a hater. You’re just a skeptic and a cheapskate. You’d gladly pay a dime for the song were that an option, and since the marginal cost of distribution is basically zero it would be profitable to sell you the song for a dime. But it’s not an option, since the overal profit-maximizing price is $1.29. And say there are a million people like you out there. That adds up to $100,000 in deadweight loss—the value of the transactions blocked by copyright protection.

Of course in the real world many of those million people will just download a copy of the song for free. Some would like you to believe that this is an action that should be analogized to hijacking a ship, threatening to murder its crew, and then stealing the ship’s cargo. But unlike piracy, unauthorized copying can often be highly welfare-enhancing because of deadweight loss.
Labels:

Comments

Post a Comment

Popular posts from this blog

The Setswana Grammar Manual

By
One of my few successes during my service here was formatting the Peace Corps South Africa grammar manual for Setswana, written mostly by Art Chambers, an SA16 volunteer.  For anyone wanting to learn Setswana, I reckon it's a pretty good primer, so I present it for free here .  If you think it sucks and you want to make changes, or you'd like to take a look at the raw TeX file, you can find it here .
6 comments
Read more

On Refusing to Vote for Bloomberg

By
Billionaire Mike Bloomberg is attempting to buy the Democratic nomination. With something like $400 million in personal spending so far, that much is clear — and it appears to be working at least somewhat well, as he is nearing second place in national polls. I would guess that he will quickly into diminishing returns, but on the other hand spending on this level is totally unprecedented. At this burn rate he could easily spend more than the entire 2016 presidential election cost both parties before the primary is over. I published a piece today outlining why I would not vote for Bloomberg against Trump (I would vote for Sanders, Warren, Buttigieg, Klobuchar, or Biden), even though I live in a swing state. This got a lot of "vote blue no matter who" people riled up . They scolded me and demanded that I pre-commit to voting for Bloomberg should he win the nomination. The argument as I understand it is to try to make it as likely as possible that whatever Democrat wins t...
4 comments
Read more

Russiagate and the Left, Round II

By
Corey Robin has responded to my article arguing that the left should take the Trump-Russia story more seriously . I do appreciate that he considers me an ally, and I feel the same towards him. However I am not convinced. The points I want to make are somewhat disconnected, so I will just take them one at a time. What should be done? Robin complains that I don't give much attention to the question of how we should respond to Russian electoral espionage. As an initial matter, the question of whether a problem is an important one is logically distinct from what the response should be. There is a sizable vein of skepticism about Russiagate on the left, and the argument of the post was that skepticism was misplaced. Solutions can be worked out later. This point is rather similar to the centrist argument that you can't talk about Medicare for All unless you've got a fully costed-out bill detailing all the necessary taxes and regulation. However, I have advanced some pol...
4 comments
Read more