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Avoiding commercial piracy

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  • MartI´nez-Sánchez, Francisco

Abstract

In this paper we analyse the roles of the government and an incumbent in preventing the entry of a pirate, who tries to avoid being caught. The framework of analysis used is a sequential duopoly model of vertical product differentiation with price competition. We find that both the government and the incumbent have key roles in preventing the entry of pirates. We show that the government will not help the incumbent to become a pure monopolist, even if it installs an antipiracy system. It will let the pirate enter either as a follower or a leader, or encourage the incumbent to set a low enough price to successfully deter the pirate from entering the market, depending on its technology for monitoring commercial piracy. Finally, we find that the pirate decides to become a leader to avoid being caught by the incumbent and the government.

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Bibliographic Info

Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 22 (2010)
Issue (Month): 4 (December)
Pages: 398-408

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Handle: RePEc:eee:iepoli:v:22:y:2010:i:4:p:398-408

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Web page: http://www.elsevier.com/locate/inca/505549

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Keywords: Commercial piracy Government Incumbent Pirate Price leadership;

References

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  1. Eric van Damme & Sjaak Hurkens, 1998. "Endogenous price leadership," Economics Working Papers 289, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
  3. Damme, E.E.C. van & Hurkens, S., 1998. "Endogenous Stackelberg leadership," Open Access publications from Tilburg University urn:nbn:nl:ui:12-80496, Tilburg University.
  4. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
  5. Bezmen, Trisha L. & Depken II, Craig A., 2006. "Influences on software piracy: Evidence from the various United States," Economics Letters, Elsevier, vol. 90(3), pages 356-361, March.
  6. Kiema, Ilkka, 2008. "Commercial piracy and intellectual property policy," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 304-318, October.
  7. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  8. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  9. repec:ebl:ecbull:v:6:y:2003:i:10:p:1-9 is not listed on IDEAS
  10. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
  11. Marron, Donald B & Steel, David G, 2000. "Which Countries Protect Intellectual Property? The Case of Software Piracy," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 159-74, April.
  12. Ming Chang & Chiu Lin & Dachrahn Wu, 2008. "Piracy and limited liability," Journal of Economics, Springer, vol. 95(1), pages 25-53, October.
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Citations

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Cited by:
  1. Paul Belleflamme & Martin Peitz, 2010. "Digital Piracy: Theory," CESifo Working Paper Series 3222, CESifo Group Munich.
  2. Francisco Martínez-Sánchez & Javier M. López Cuñat, 2011. "Anti-piracy policy and quality differential in markets for information goods," Working Papers. Serie AD 2011-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  3. Éric Darmon & Thomas Le Texier, 2014. "Private or Public Law Enforcement? The Case of Digital Piracy Policies with Non-monitored Illegal Behaviors," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201403, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.

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