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Piracy and Competition

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Author Info
Paul Belleflamme
Pierre M. Picard

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Abstract

"The effects of (private, small-scale) piracy on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are assumed to be perfectly differentiated, demands are interdependent because the copying technology exhibits increasing returns to scale. We characterize the Bertrand-Nash equilibria in a duopoly. Comparing equilibrium prices to the prices set by a multiproduct monopolist, we show that competition drives prices up and may lead to price dispersion. Competition reduces total surplus in the short run but provides higher incentives to create in the long run." Copyright 2007, The Author(s) Journal Compilation (c) 2007 Blackwell Publishing.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Economics & Management Strategy.

Volume (Year): 16 (2007)
Issue (Month): 2 (06)
Pages: 351-383
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Handle: RePEc:bla:jemstr:v:16:y:2007:i:2:p:351-383

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September. [Downloadable!] (restricted)
  2. P Belleflamme & P M Picard, 2003. "Competition over Piratable Goods," The School of Economics Discussion Paper Series 0332, Economics, The University of Manchester. [Downloadable!]
  3. Yoon, Kiho, 2002. "The optimal level of copyright protection," Information Economics and Policy, Elsevier, vol. 14(3), pages 327-348, September. [Downloadable!] (restricted)
  4. Boccard, N. & Wauthy, X., 1997. "The Hotelling Model With Capacity Precommitment," Papers 9783, Catholique de Louvain - Center for Operations Research and Economics.
    Other versions:
  5. Oz Shy & Jacques-Françlois Thisse, 1999. "A Strategic Approach to Software Protection," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 8(2), pages 163-190, 06. [Downloadable!] (restricted)
  6. Nicolas Boccard & Xavier Wauthy, 2003. "Optimal Quotas, Price Competition And Products' Attributes," The Japanese Economic Review, Japanese Economic Association, vol. 54(4), pages 395-408. [Downloadable!] (restricted)
  7. Landes, William M & Posner, Richard A, 1989. "An Economic Analysis of Copyright Law," Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 325-63, June.
  8. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Blackwell Publishing, vol. 42(2), pages 155-66, June. [Downloadable!] (restricted)
  9. Besen, Stanley M & Raskind, Leo J, 1991. "An Introduction to the Law and Economics of Intellectual Property," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 3-27, Winter. [Downloadable!] (restricted)
  10. Liebowitz, S J, 1985. "Copying and Indirect Appropriability: Photocopying of Journals," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 945-57, October. [Downloadable!] (restricted)
  11. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  12. Gayer, Amit & Shy, Oz, 2003. "Copyright protection and hardware taxation," Information Economics and Policy, Elsevier, vol. 15(4), pages 467-483, December. [Downloadable!] (restricted)
  13. Martin Peitz & Patrick Waelbroeck, 2003. "Piracy of Digital Products: A Critical Review of the Economics Literature," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  14. Johnson, William R, 1985. "The Economics of Copying," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 158-74, February. [Downloadable!] (restricted)
  15. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-46, April. [Downloadable!] (restricted)
  16. Besen, Stanley M & Kirby, Sheila Nataraj, 1989. "Private Copying, Appropriability, and Optimal Copying Royalties," Journal of Law & Economics, University of Chicago Press, vol. 32(2), pages 255-80, October.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alessandro Balestrino, 2007. "It is a Theft but not a Crime," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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