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17 U. Dayton L. Rev. 853 (1991-1992)
Asymmetric Market Failure and Prisoner's Dilemma in Intellectual Property

handle is hein.journals/udlr17 and id is 861 raw text is: ASYMMETRIC MARKET FAILURE AND
PRISONER'S DILEMMA IN INTELLECTUAL
PROPERTY*
Wendy J. Gordon**
I. PRISONER'S DILEMMA AND ASYMMETRIC MARKET FAILURE
Underlying many contemporary discussions of intellectual product
regulation are two implicit economic models: one having to do with pri-
mary resource allocation, and one having to do with both allocative
effects and administrative costs.' The implicit allocative model is what
game theorists call the prisoner's dilemma.' I have identified the
model that implicitly addresses both allocative and administrative cost
issues as asymmetric market failure.13 My primary goal here is to
explicate these two models. The more clear one is about underlying
models, the easier it is to unpack them, show their virtues and inade-
quacies, and investigate the ways they should be supplemented.
As one example of scholarship that in whole or in part shows im-
plicit reliance on these models I shall use the paper by Dennis Karjala
prepared for this symposium.' There is no need, however, to read the
Karjala paper in order to Understand my argument.
Although intellectual property law implicates issues that go well
beyond economics,5 these two economic models are themselves impor-
tant enough to merit identification and examination. In this short
space, I will provide an introductory overview of each; for more de-
* Copyright © 1992 Wendy J. Gordon.
** Professor of Law, Rutgers University School of Law-Newark; Visiting Professor, Uni-
versity of Chicago School of Law. I am grateful to Sam Postbrief, Jim Lindgren, and Doug Baird
for their helpful comments.
I. In Guido Calabresi's now-familiar terms, these would be models addressing primary and
tertiary costs, respectively. See GUIDO CALABRESI, THE COSTS OF ACCIDENTS 26-28 (1970).
2. See, e.g., MORTON D. DAVIS, GAME THEORY: A NONTECHNICAL INTRODUCTION 93-103,
109-14, 127-31 (1970); JAMES W. FRIEDMAN, GAME THEORY WITH APPLICATIONS TO ECONOMICS
66, 68-70 (1986); CHARLES GOETZ, LAW AND ECONOMICS 12-17 (1984); THOMAS SCHELLING.
MICROMOTIVES AND MACROBEHAVIOR 110-15, 216-17, 231 (1978); Ken Binmore & Partha Das-
gupta, Game Theory: A Survey, in ECONOMIC ORGANIZATIONS AS GAMES 1, at 24-26 (Ken
Binmore & Partha Dasgupta eds., 1986).
3. See Wendy J. Gordon, On Owning Information: Intellectual Property and the Restitutio-
nary Impulse, 78 VA. L. REV. 149, 222-23, 230-38 (1992).
4. Dennis S. Karjala, Copyright and Misappropriation, 17 U. DAYTON L. REV. 885 (1992).
5. See, e.g., Wendy J. Gordon, An Inquiry into the Merits of Copyright: The Challenges of
Consistency, Consent and Encouragement Theory, 41 STAN. L. REV. 1343, 1435-69 (1989) (ex-
ploring limitations of the economic approach and suggesting alternative or supplementary norma-
tive approaches).

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