ABSTRACT
As a marketable commodity, intellectual property has come under the scrutiny of economists specializing in the "economics of information". This chapter reviews some of the key concepts from the field of "information economics", particularly those germane to intellectual property issues. Traditionally, the problem of exclusion of nonpayers from viewing motion pictures was a simple matter. In the days of the kinetoscope, watching "movies" was originally limited to one customer per exhibition device. When television first appeared as a mass medium during the 1950s, there was some reluctance by the major motion picture producers to sell their products to broadcasters, mainly out of fear of losing their audiences. Still, when dealing with the problem of exclusion, broadcasting cannot be considered as efficient, in terms of per-consumer net revenue, as direct payment at the box office. Producers and distributors of film and television entertainment have recognized that higher returns are possible from direct payment for home viewing of film and video entertainment.
