A Simple Model of Copyright Levies: Implications for Harmonization

This paper analyzes optimal copyright levies in a representative consumer model and derives welfare implications for harmonization of levy rates. When the policymakers place enough weight on the interests of collecting societies, harmonization could lead to a reduction in social welfare. When countries are asymmetric, the country with a larger proportion of foreign consumption and more ine¢ cient tax system loses more from harmonization. A calibration exercise using European data shows that harmonization would increase aggregate welfare. In some countries, both consumers and policymakers are better o¤; however, in others, policymakers are worse o¤ although consumers would gain from harmonization. (JEL F42, O34, O52)