Versioning of information goods under the threat of piracy

Cho, Won Yong; Ahn, Byong Hun

doi:10.1016/j.infoecopol.2010.07.001

Cited by 26 publications

(7 citation statements)

References 19 publications

(20 reference statements)

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“…Furthermore, the multiplicity of thresholds in our game represent different quality levels that can be attained depending on how the individuals as a whole contribute to the public good. Such a characterization of quality levels is also consistent with claims in the piracy context that the quality of the digital good produced (e.g., features delivered, access to support resources) depends on the total of individual contributions (Cho and Ahn, 2010;Danaher et al, 2014;Jain, 2008). In such games, it turns out the actions that lead to social optima are also individually maximizing; but subjects are known to have problems coordinating to the optimal.…”

Section: Introductionsupporting

confidence: 74%

Information Feedback, Targeting, and Coordination: An Experimental Study

2012

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There are many contexts where an "everybody else is doing it" attitude is relevant. We evaluate the impact of this attitude in a multi-threshold public goods game. We use a lab experiment to study the role of providing information about contribution behavior to targeted subsets of individuals, and its effect on coordination. Treatments include one in which no information is provided and three others that vary in whom we provide information to: a random sample of subjects; those whose contributions are below the average of their group, and those whose contributions are above the average of their group. We find that the random provision of information is no different than not providing information at all. More importantly, average contributions improve with targeted treatments. Coordination waste is also lower with targeted treatments. The insights from this research are relevant more broadly to contexts including piracy, open innovation, and crowdfunding.

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Section: Introductionsupporting

confidence: 74%

Information Feedback, Targeting, and Coordination: An Experimental Study

2012

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“…The findings of our paper counter the results of Alvisi, Argentesi and Carbonara's (2002) study, which assumes costless quality provision under end-user piracy. Cremer and Pestieau (2008) and Cho and Ahn (2010) conclude unambiguously that product versioning is the optimal strategy for the original producer in the presence of end-user piracy with a positive cost for quality provision. In the case of end-user piracy, the profit earned by the original producer is entirely monopoly profit, which is naturally more than the duopoly profit earned by the producer from the lower spectrum of consumers when it has to compete with a profitmaximising commercial pirate.…”

Section: Resultsmentioning

confidence: 96%

“…There is a gamut of literature that discusses various issues related to product versioning under end-user piracy (Alvisi et al 2002;Wu et al 2003;Cremer et al 2008;Cho et al 2010). Alvisi et al (2002) assert that end-user piracy incentivises the original good producer to produce different qualities of the same product to deter piracy.…”

Section: Introductionmentioning

confidence: 99%

“…The profit-maximising monopolist charges the highest for piracy control, followed by the welfare-maximising monopolist and then the public authority. Cho and Ahn (2010) discuss the quality choices of an original good producer practicing product versioning in a vertically differentiated market in the presence of enduser piracy. The paper addresses the issue of a vertically differentiated market based on the parameter of the consumers' willingness to pay, which we adopt in our study.…”

Section: Introductionmentioning

confidence: 99%

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A theoretical analysis of product versioning in the context of commercial piracy

Basu

Banerjee

2018

EKON ANAL

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The study develops a vertically differentiated duopoly model in the presence of commercial piracy with two groups of consumers, a business group and a home group, with the former having higher willingness to pay for the product. A firm producing an original information good sells it with endogenously chosen product quality and acts as a price leader, and the commercial pirate becomes the price follower. There exists a stringent government policy of monitoring commercial piracy, which increases the marginal cost of the pirate. We study and compare the two regimes of no-versioning (selling a single quality product) and product versioning (selling products with different price and quality combinations to different consumer groups). In the versioning regime, depending upon demand and government monitoring parameters, two equilibria are observed. Comparing the original firm's profit in each of these versioning cases suggests that versioning may or may not be the original firm's optimal strategy in the presence of commercial piracy. This result is counterintuitive to existing literature on product versioning in the context of enduser piracy.

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“…If customers hold full information about such product line, they will rationally choose the most preferred version by maximizing their utilities. It might be the case that the versioning strategy in such setup is more effective than the single‐version product, because such versioning strategy can satisfy customers’ heterogeneous tastes better and in this way the seller is able to extract more surplus from buyers (Wu & Chen, ; Cho & Ahn, ). To simultaneously address the versioning design and the trial provision issues (like what has been covered in our article), we shall assume that the seller first endogenously design the contents of two versions.…”

Section: Discussionmentioning

confidence: 99%

Trial or No Trial: Supplying Costly Signals to Improve Profits*

2016

Decision Sciences

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Many software and video game firms offer free trials with limited content to help buyers assess the likely value of the goods that they may purchase. This article examines fundamental issues related to the incentives and risks for a monopoly by providing a trial. Assuming that a seller can control the mix of components in a trial, we introduce a new mechanism for buyers’ inference of using a trial. We find that a trial may enable the seller to segment the market and charge a higher price to high‐valuation buyers, but can also cause a decline in demand. Moreover, the seller forfeits partial value of a full product through providing a free trial, so the benefit is offset by this cannibalization loss. In addition to the size and content of a trial, the distribution of buyers’ prior belief also affects a trial's ability to convey information. We show that a trial can provide more information if the prior belief is more concentrated in the tails of the distribution.

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Versioning of information goods under the threat of piracy

Cited by 26 publications

References 19 publications

Information Feedback, Targeting, and Coordination: An Experimental Study

Information Feedback, Targeting, and Coordination: An Experimental Study

A theoretical analysis of product versioning in the context of commercial piracy

Trial or No Trial: Supplying Costly Signals to Improve Profits*

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