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Piracy in a two-sided software market

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  • Rasch, Alexander
  • Wenzel, Tobias

Abstract

This paper studies the impact of software piracy in a two-sided-market setting. Software platforms attract developers and users to maximize their profits. The equilibrium price structure is affected by piracy: license fees to developers are higher with more software protection but the impact on user prices is ambiguous. A conflict between platforms and software developers over software protection may arise: whereas one side benefits from better protection, the other party loses out. Under platform compatibility, this conflict is no longer present.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 88 (2013)
Issue (Month): C ()
Pages: 78-89

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Handle: RePEc:eee:jeborg:v:88:y:2013:i:c:p:78-89

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Keywords: Developer; Piracy; Platform; Software; Two-sided market;

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References

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  1. Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers dp409, Financial Markets Group.
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  5. BELLEFLAME, Paul & PEITZ, Martin, . "Platform competition and seller investment incentives," CORE Discussion Papers RP -2339, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
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  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, Wiley Blackwell, vol. 42(2), pages 155-66, June.
  9. Jay Pil Choi, 2010. "TYING IN TWO-SIDED MARKETS WITH MULTI-HOMING -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 607-626, 09.
  10. Ralf Dewenter & Justus Haucap & Tobias Wenzel, 2012. "On File Sharing With Indirect Network Effects Between Concert Ticket Sales and Music Recordings," Journal of Media Economics, Taylor & Francis Journals, vol. 25(3), pages 168-178, September.
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  12. Joshua Slive & Dan Bernhardt, 1998. "Pirated for Profit," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 886-899, November.
  13. 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.
  14. Andrei Hagiu, 2009. "Two-Sided Platforms: Product Variety and Pricing Structures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1011-1043, December.
  15. Kiema, Ilkka, 2008. "Commercial piracy and intellectual property policy," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 304-318, October.
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  18. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  19. Martin Peitz, 2004. "A Strategic Approach to Software Protection: Comment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(2), pages 371-374, 06.
  20. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
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Cited by:
  1. Dewenter, Ralf & Haucap, Justus & Wenzel, Tobias, 2011. "On file sharing with indirect Network effects between concert ticket sales and music recordings," DICE Discussion Papers 28, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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