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Optimal Enforcement for Content Industries under Positive External Effects of Piracy

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  • Domon Koji

    (School of Social Sciences, Waseda University, Tokyo, Japan)

Abstract

Content industries have several profit sources that positively interact with one another, and piracy affects them not only negatively but also positively. For copyright holders, choosing to allow piracy depends upon its total external effects. This paper proves that in such case the profit function is convex with respect to the level of enforcement. This paper shows a convex profit function with respect to the level of enforcement. The convexity leads to a corner solution of optimal enforcement for copyright holders. Which corner solution is selected depends on the relative size of the sub-market, and no enforcement is profitable if the submarket size is relatively large. This result compensates for a shortcoming of discussions that assume only two options regarding the level of enforcement, zero or perfect enforcement.

Suggested Citation

  • Domon Koji, 2021. "Optimal Enforcement for Content Industries under Positive External Effects of Piracy," Review of Law & Economics, De Gruyter, vol. 17(3), pages 657-672, November.
    • Handle: RePEc:bpj:rlecon:v:17:y:2021:i:3:p:657-672:n:2
    DOI: 10.1515/rle-2020-0029
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    More about this item

    Keywords

    copyright; content industry; optimal enforcement; piracy; K23; L13; L43;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation

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