Description:
AbstractWe analyse the legal and economic background and implications of the destandardisation of digital contracts, with a focus on consumer protection and overall efficiency. We argue that firms can exploit destandardisation paired with asymmetric information to extract rents. We propose the introduction of a numerus clausus principle in the digital licensing realm (a limit to the contractual freedom of parties to create proprietary rights) as a way of reducing rent extraction by firms and increasing consumer surplus. With a simple economic model, we account for the tradeoff between the benefit from reduced market power and the social cost of legally enforced standardisation, and show that some degree of enforced standardisation can be optimal.