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Digital piracy: Price-quality competition between legal firms and P2P network hosts

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  • Chang, Yang-Ming
  • Walter, Jason

Abstract

This paper examines competition between firms that produce legal information goods and host sites that index P2P links. Specifically, we develop a simple model in which a legal firm determines price for its information good and a P2P host site decides on its investment to improve the quality and accessibility of the information goods linked to its site for free download. In the analysis, users choose between goods that are both horizontally and vertically differentiated. We show conditions under which the profitability of legal firms may or may not be negatively affected by the presence of a P2P network. In addition, we demonstrate the resilience of P2P host sites to distribute digital goods. Our approach extends earlier studies in the literature to further allow for price-quality competition between legal firms and P2P network hosts.

Suggested Citation

  • Chang, Yang-Ming & Walter, Jason, 2015. "Digital piracy: Price-quality competition between legal firms and P2P network hosts," Information Economics and Policy, Elsevier, vol. 31(C), pages 22-32.
    • Handle: RePEc:eee:iepoli:v:31:y:2015:i:c:p:22-32
    DOI: 10.1016/j.infoecopol.2015.04.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Hiller R. Scott & Walter Jason M., 2017. "The Rise of Streaming Music and Implications for Music Production," Review of Network Economics, De Gruyter, vol. 16(4), pages 351-385, December.
    2. Herings, P. Jean-Jacques & Peeters, Ronald & Yang, Michael S., 2018. "Piracy on the Internet: Accommodate it or fight it? A dynamic approach," European Journal of Operational Research, Elsevier, vol. 266(1), pages 328-339.
    3. Ata Allah Taleizadeh & Mahsa Noori-daryan & Mohammad Reza Soltani & Reza Askari, 2022. "Optimal pricing and ordering digital goods under piracy using game theory," Annals of Operations Research, Springer, vol. 315(2), pages 931-968, August.
    4. Huang, Yeu-Shiang & Lin, Shin-Hua & Fang, Chih-Chiang, 2017. "Pricing and coordination with consideration of piracy for digital goods in supply chains," Journal of Business Research, Elsevier, vol. 77(C), pages 30-40.

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    More about this item

    Keywords

    Digital piracy; Legal information goods; P2P network; Market competition;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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