A model of piracy

The Economics of IPR Protection Policies: Comment

“…This result has previously been obtained from a theoretical viewpoint for both the case of copies made by end consumers (Shy andThisse, 1999 andBae andChoi, 2006) and the case of copies made by a single firm that sells them on the market (Martínez-Sánchez, 2007). The result is also compatible with the results in Johnson (1985), where it is obtained that copying reduces sales of the legal product in spite of the incumbent's pricing behavior.…”

Piracy in a two-sided software market

“…As users are typically hurt from better software protection-either due to the fact that software is harder to copy or due to higher software prices resulting from a reduced threat of piracy-, the case where θ < 0 seems to be the most relevant. For the largest part of the paper, we will present our results using this general formulation but we will consider some specific applications (see Section 4) drawing on the piracy models of Yoon (2002), Belleflamme (2003), as well as Bae and Choi (2006). These models provide a microfoundation for our more general formulation.…”

“…We make use of a framework where legal and illegal types of software are vertically differentiated (Yoon, 2002;Belleflamme, 2003;Bae and Choi, 2006).…”

Impact of piracy on innovation at software firms and implications for piracy policy

“…However, they look at an end user piracy setting, and the impact of policy on the quality choices of firms is not studied. A recent working paper (Bae and Choi 2003) studies the impact of intellectual property right protection on innovation. They operationalize the intellectual property right protection through a 'reproduction cost' and a 'degradation cost'.…”

“…Both are exogenous parameters that allow comparative statics on optimal quality choice. Unlike this paper (Bae and Choi 2003), our policy variable is endogenous and we study the impact of competition. Gopal and Sanders (1997) distinguish between preventive and deterrent measures to fight software piracy and show in a setting with club formation, that using deterrent measures is optimal.…”