Youngshin Kim
This paper analyzes digital content protection policy from a public choice perspective. It examines how legal protection and public enforcement for digital content are determined. These policy choices may not simply reflect the goal of maximizing social welfare. They may also be distorted by the rent-seeking activities of interest groups and by the median voter’s preference for content accessibility. The model shows that stronger legal regulation weakens platform firms’ incentives to invest in their own technological protection measures. It also shows that political regulation can exceed the socially optimal level when rent-seeking pressure from interest groups is greater than the median voter’s preference for access to digital content. A key finding of this paper is the paradox of digital regulation. Improvements in digital content protection technology should, in principle, reduce the need for government regulation. However, when rent-seeking activities exist, technological progress may instead increase the relative distortion of politically chosen regulation from the socially optimal level. This result is demonstrated both theoretically and through numerical examples. These findings suggest that digital content protection policy should not focus only on strengthening copyright protection or reducing unauthorized use. Policymakers should also consider consumer accessibility, public enforcement costs, incentives for private technological investment, and the possibility of regulatory distortion caused by rent-seeking.