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Innovation and copyright infringement: The Case of Commercial Piracy and End-user Piracy

Author

Listed:
  • Dyuti Banerjee

    (Department of Economics, Monash University, Australia)

  • Sougata Poddar

    (Department of Economics, Faculty of Business and Law, Auckland University of Technology)

Abstract

The purpose of this paper is to analyse the question, whether copyright infringement of digital products like software commonly labelled as piracy impedes innovation. We find the answer depends on the nature of piracy i.e. whether it is end-users or commercial piracy. For end user piracy, copyright infringement does not necessarily impede innovation; in fact it can be shown that it encourages innovation when the pirates are active. However, for commercial piracy, it always impedes innovation which has negative implications on the overall welfare of the society. We show under what conditions the government intervention through IPR protection strategy (like monitoring and imposing a fine to the pirate) can support the copyright holder for higher level of innovation. We find the socially optimally monitoring rate for the government that result in maximum innovation for the copyright holder

Suggested Citation

  • Dyuti Banerjee & Sougata Poddar, 2013. "Innovation and copyright infringement: The Case of Commercial Piracy and End-user Piracy," Working Papers 2013-09, Auckland University of Technology, Department of Economics.
    • Handle: RePEc:aut:wpaper:201309
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    More about this item

    Keywords

    Innovation; piracy; monitoring; social welfare;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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