"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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Paper
BELLEFLAMME, Paul & PICARD, Pierre, 2005.
"Piracy and competition,"
CORE Discussion Papers
2005083, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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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.:
BELLEFLAMME, Paul & PICARD, Pierre M., 2004.
"Competition over piratable goods,"
CORE Discussion Papers
2004055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
[Downloadable!]
Varian, Hal R, 1980.
"A Model of Sales,"
American Economic Review,
American Economic Association, vol. 70(4), pages 651-59, September.
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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.)
Francisco Martinez, 2008.
"Learning by Copying,"
ThE Papers
08/05, Department of Economic Theory and Economic History of the University of Granada..
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