Economic Analysis of Institutions for Transactions of Information

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The objective of this project was to investigate from the economic standpoint the function of alternative institutions for transactions of information and information goods. Attention was drawn to the presence of the cost of copying information, the cost of protecting information from being copied, and the cost of protecting the right of information ownership (i. e., the intellectual property right). Ultimately, this project intends to contribute to improving existing institutions for transactions of information and to creating new institutions which can facilitate efficient production and transactions of information and information goods.A model to explain the process of production, transaction, and usage of information and information goods was constructed. Three economic agents were considered : (i) the producer of information, who maximizes the difference of revenues from selling information he produced and the costs of information production and protection of information from bein … More g copied, given technology of information production and technology of copy prevention, (ii) the copier of information, who maximizes the difference of revenues from selling (copied) information and the costs of copying original information, and (iii) the user of information, who maximizes his utility obtained from purchasing and using original or secondary information. An equilibrium in the market in which information is transacted by these three agents was investigated.Second, a theoretical framework of designing desirable institutions for information transactions (including the extent as well as the mode of protecting ownership of information) was investigated by itemizing factors affecting model analysis. In particular, the social benefit obtained from new information, the social cost of producing and reproducing (i. e., copying) information, the social cost of protecting information from being copied, the social cost of breaking information protection, and the need of incentives for information production were considered. Some of the problems which would arise in building such a model are identified. It is concluded that a general theoretical approach to this problem would be difficult ; practical methods such as Monte Carlo study would be more appropriate. Less