Review before the Second Midterm

Review before the Second Midterm - Review before the Second...

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Review before the Second Midterm I: Determining property rules involves a set of questions: A. How rights should be bundled (Coase article, our earlier discussion) B. How should you be allowed to defend your property rights (property vs liability) C. What should be property? o 1. Property vs commons--things, words, IP in the middle. Primitives. All you can eat. o 2. Defining and measuring boundaries. Floating island. Underground oil pools. o 3. Defending: Bionic burglar alarm. Pirating software. o 4. Transaction costs: Property in large animals, not the land they are hunted over. English--quiet story. All you can eat restaurants. o 5. Creating: Rent seeking. homesteading problem. Inefficient patent races. o 6. Supply elasticity--how much do we need the incentives provided by property for production? D. IP sketch: o 1. Copyright automatic, long term. o 2. Patent grudging, short term. Requires "sufficiently big innovation" to count. o 3. Trade secret if you guard it. Permanent. But very limited protection. E. Fits in because: o 1. Copyright has no homesteading problem (infinite commons), easy boundaries. o 2. Patent has a limited commons, risk of parallel invention, cost of patent races, fuzzy boundaries. o 3. Computer programs fit under copyright not because they are writings but because they have the characteristics described. o 4. Trade secrets not preempted, because they plug some of the holes in the patent system. II. Coase Article : Explains the bicausal problem, the "all alternatives imperfect" problem, argues that the common law courts got things about right. III. Contract Law A. We want enforceable contracts because performance occurs over time, with transaction specific investments. House building B. There are private ways of enforcing, via arbitration, reputation, bonding, hostages, etc., which are important, but don't cover all of the problem. C. We can't just let the parties define all of the rules, both because there isn't enough fine print to cover all alternatives (we need default rules) and because we need to be able to decide whether there is a contract to enforce. And maybe because we want to control the terms?
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o 1. Argument for freedom of contracts: It is in the parties' interest to find and include the efficient terms, and they are more competent to do it than the judge. o
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Review before the Second Midterm - Review before the Second...

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