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This essay argues that the assumption that “progress” is qualitatively independent of the underlying entitlement structure is wrong. In particular, I shall argue that a shift to a copyright rule structure based on highly granular, contractually enforced “price discrimination” would work a fundamental shift, as well, in the nature of the progress produced. The critique of the contractual price discrimination model, moreover, exposes deep defects in the use of neoclassical “law and economics” methodology to solve problems relating to the incentive structure of copyright law. What is needed, instead, is an economic model of copyright that acknowledges the central role of unpredictability in the creative process. Part II introduces the contractual price discrimination model and critically examines the premises on which it is based. Part III considers the larger institutional and distributional implications of a shift to contractual price discrimination. It argues that the current system of imperfect controls produces important public benefits – important substantive components of “progress” – that the contractual price discrimination model does not accurately value and would not itself produce to the same extent. Part IV concludes that the need to preserve these benefits, which stem from the inherent complexity and unpredictability of the creative process, requires both a very different structure for copyright law and a very different approach to the task of constructing economic models.

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53 Vand. L. Rev. 1799-1819 (2000)