Notes from Law School by Kristopher Nelson: Value of Information

Cover of Foundations of Economic Analysis of Law

In general, the social value of information that can be reused (words of a book, for example) often exceeds cost of development. This makes it socially desirable to generate.

If it can be copied at low cost by others, the first developer will have few buyers as these initial buyers can resell or disseminate the information themselves, usually at a lower cost. All other things being equal, this will tend to undesirably hamper the development of new information.

To deal with this, we can (1) grant property rights (patents, trade secrets, copyright) or (2) create a system of state rewards for creators.

Steven Shavell, Foundations of Economic Analysis of Law, p. 138 (2004).