Question

Legal rules, in creating incentives for socially beneficial actions, also (either directly or through the incentives they create) give rise to social costs. Some possible changes in legal rules are listed below. For each one, describe a social benefit it would generate and a social cost it could generate.

a. Shortening the length of the term of a copyright from creator’s life plus 70 years to 20 years from the time of creation.

b. Increasing the legal liability of internet service providers for any copyright violations in which their customers are involved (Internet service providers must pay monetary damages if their customers use internet service in a way that infringes on copyright.

c. Adopting a rule that a purchaser of stolen goods becomes the legal owner of that property, provided that it should not have been obvious to him that the property was stolen.

d. Passing a new law concerning cargos of sunken ships saying that once ten years has passed since the sinking, the cargo belongs to whoever recovers it. (Currently, the cargo of a sunken ship, if it is recovered, will belong to the original owner of the cargo, or to the insurance company that insured the cargo of the sunken ship and paid off the owners’ claims).

Answer 1