On the Supply of Creative Work: Evidence from the Movies

Copyright law must strike a delicate balance between the long-term need to encourage innovation and the short-term use of work already created (Arnold Plant, 1934; William D. Nordhaus, 1969). This balance depends on the extent to which stronger copyright protection actually stimulates creative activity, which in turn depends on two effects. One is the impact of copyright on the income of authors of books, movies, music, software, and other creative work. The other is the effect of the economic incentive in stimulating more creative activity. Debate on these issues ranges from scholarly arguments that the extent of copyright is excessive (Lawrence Lessig, 2001; Michele Boldrin and David Levine, 2002) to industry calls for expanding the length and scope of copyright. The debate, however, has not been much informed by empirical research, other than fragmentary evidence that the United States’ 1891 extension of copyright law to foreigners had little impact on American and English authors (Plant, 1934; B. Zorina Khan, 2001) and that British composers and musicians receive minimal royalty income (Ruth Towse, 2000). In this paper, we investigate the impact of economic incentives on the international supply of big-screen movies. More particularly, we also study the impact of a 1998 increase in the term of copyright on U.S. movie production.