The paper develops a model of exclusion and property rights.
Consumers choose between legal and illegal use.
A monopoly provider chooses a price for legal use, a fine for illegal use, and a level of monitoring to detect illegal use. This model features a continuum of exclusion regimes, instead of only the poles of private and public provision, as is typical. Since the necessity of enforcing property rights creates two classes of users, the provider is forced to price discriminate. Furthermore, both the equilibrium and optimum feature imperfect exclusion, and equilibrium exclusion is excessive.