Digitalization, copyright and innovation in the creative industries: An agent-based model

The ambiguity of the empirical results on the relationship between copyright and creativity calls for a better theoretical understanding of the issue, possibly enlarging the analysis to other factors such as technology and copyright enforcement. This paper addresses these complex policy issues by developing an agent-based model (ABM) to study how the interplay between digitization and copyright enforcement affects the production and access to cultural goods. The model includes creators who compete in different submarkets and invest in activities that might lead to the generation of creative outputs in existing submarkets, new (to the creators) submarkets, or in newly - invented - submarkets. Finally, the model features a copyright system that provides creators with the exclusive right to reproduce their original copies and a pirate market responsible for creating and distributing pirated copies.