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Introduction
Imagine it is 1995, and someone proposes to construct an encyclopedia on the Internet that is free for everyone to read, has very weak filters, few editors, no peer review, and is open to expert and uncertified amateur alike to publish articles anonymously on whatever they wanted, from the Frisch elasticity of labor supply, to the Loch Ness Monster, to a list of animals with fraudulent diplomas. 1It would have barely passed the giggle test.
Economists would worry about the 'public good' aspects about original articles (Arrow, 1962; Besen, 1991; Nordhaus, 1969). The encyclopedia would be one large collective action problem, where the benefits of reading the encyclopedia (for free) are widely dispersed among anonymous readers and the costs of putting in the (uncompensated) time and effort of researching and writing articles is concentrated on individual writers (Olson, 1965). Expressive works like original encyclopedia articles feature high fixed costs of production and low marginal costs of distribution and use. Producing an expressive work requires significant effort and investment of time, research, experimentation, and capital to produce an expressive work, but as expressive works are non-rival in consumption - that is, one person's reading of an article does not prevent others from reading the article simultaneously, especially if it is online - the original producer must worry about 'free riders'. If enough users are able to consume the work without paying (via copying, sharing, or otherwise consuming without payment), then the original author is unable to recoup her capital costs. With an expected negative return, she would have little incentive to produce in the first place. Copyright laws are intended to prevent this from happening by coercively encouraging free riders to purchase the good rather than suffer legal sanctions. In practice, such laws establish a trade-off between generating the incentive to produce original works by legally prohibiting free riders from unauthorized uses and subsequently reducing access to existing works as a result of the copyright holder's veto power (Landes and Posner, 2003).
Furthermore, anyone would recognize that without strong, centralized control, abuse is likely, if not guaranteed, to be flagrant. Users would pass rumor and fancy as fact, and the careful, dispassionate analysis of scholarly experts would be buried by the demagogues,...