Intellectual property theft is not a victimless activity, as asserted...
Intellectual property theft is not a victimless activity, as asserted by opponents of increased enforcement against so-called rogue websites, the Phoenix Center said in a study (http://xrl.us/bmyrxm). Though opponents are correct that IP theft is “non-rivalrous” in that “a stolen…
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copy of a movie does not diminish the ability of others to view it,” that illicit transfer actually reduces “social welfare” by acting as a “distortionary tax on sellers,” said the study released Monday. Using a “very conventional dynamic general equilibrium framework in which a representative consumer (or, equivalently, a continuum of consumers) optimizes their consumption and investment plan over time,” the study shows that “the existence of theft, even when it is costless and perfectly ‘efficient,’ has much the same effect as causing consumers to behave as if the future were of less importance. When the future is seen as less important, less is invested since investment, by definition, is costly now but provides its benefits only in the future.” The study observes “lower equilibrium levels of capital investment and output” resulting from IP theft: “Wages are reduced. These harms occur because theft deprives producers of sales, reducing the apparent returns to capital investments.” The study was written by center President Lawrence Spiwak, Chief Economist George Ford and senior fellows Randolph Beard and Michael Stern, who are also Auburn University economics professors.