Economics of Copyright(a) What is the main economic argument against the 1998 Copyright Term Extension Act (whichextended copyright terms for 20 years) being applied retroactively to existing works? Include adiagram to answer this question.(b) Using a simple numerical example, illustrate how the CTEA provides very little additionalincentive for artists to create new works. For the example, consider an author who writes a novel thatgenerates revenues of $100,000 per year while on copyright, and who lives for 30 years afterpublishing the novel. Recall that the formula for calculating the net present value (NPV) of a streamof annual payments equal to CP that lasts for n years is:NPV= CP * [ 1 (1/1+r)^n ] / rwhere r is the discount rate which you can assume is 0.05 (or 5%). Also recall that the CTEAextended copyright from life of the author plus 50 years to life of the author plus 70 years.Helpful calculations:(1/1.05)^80 = 0.02(1/1.05)^20 = 0.381.05^80 49.56●

Copyright is a legal concept that grants the creator of an original work exclusive rights to control…

(a) What is the main economic argument against the 1998 Copyright Term Extension Act (which extended copyright terms for 20 years) being applied retroactively to existing works? Include a diagram to answer this question.

(a) What is the main economic argument against the 1998 Copyright Term Extension Act (which extended copyright terms for 20 years) being applied retroactively to existing works? Include a diagram to answer this question.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

Economics of Copyright
(a) What is the main economic argument against the 1998 Copyright Term Extension Act (which
extended copyright terms for 20 years) being applied retroactively to existing works? Include a
diagram to answer this question.
(b) Using a simple numerical example, illustrate how the CTEA provides very little additional
incentive for artists to create new works. For the example, consider an author who writes a novel that
generates revenues of $100,000 per year while on copyright, and who lives for 30 years after
publishing the novel. Recall that the formula for calculating the net present value (NPV) of a stream
of annual payments equal to CP that lasts for n years is:
NPV= CP * [ 1 (1/1+r)^n ] / r
where r is the discount rate which you can assume is 0.05 (or 5%). Also recall that the CTEA
extended copyright from life of the author plus 50 years to life of the author plus 70 years.
Helpful calculations:
(1/1.05)^80 = 0.02
(1/1.05)^20 = 0.38
1.05^80 49.56
●

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