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Piracy of Digital Products: A Critical Review of the Economics Literature

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Author Info
Martin Peitz ()
Patrick Waelbroeck ()

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Abstract

Digital products have the property that they can be copied almost costlessly. This makes them candidates for non-commercial copying by final consumers. Because the copy of a copy typically does not deteriorate in quality, copying products can become a wide-spread phenomenon -- this can be illustrated by the surge of file-sharing networks. In this paper we provide a critical overview of the literature that addresses the economic consequences of end-user copying. We conclude that some models with network effects are well-suited for the analysis of software copying while other models incorporating the feature that copies provide information about the originals may be useful for the analysis of digital music copying.

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Publisher Info
Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1071.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1071

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Related research
Keywords: information good piracy copyright internet peer-to-peer software music

Other versions of this item:

Find related papers by JEL classification:
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

This paper has been announced in the following NEP Reports:

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.:
  1. Bakos, Yannis & Brynjolfsson, Erik & Lichtman, Douglas, 1999. "Shared Information Goods," Journal of Law & Economics, University of Chicago Press, vol. 42(1), pages 117-55, April.
  2. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September. [Downloadable!] (restricted)
  3. Yoon, Kiho, 2002. "The optimal level of copyright protection," Information Economics and Policy, Elsevier, vol. 14(3), pages 327-348, September. [Downloadable!] (restricted)
  4. Gayer, Amit & Shy, Oz, 2003. "Internet and peer-to-peer distributions in markets for digital products," Economics Letters, Elsevier, vol. 81(2), pages 197-203, November. [Downloadable!] (restricted)
  5. Paul Belleflamme, 2002. "Pricing Information Goods in the Presence of Copying," Working Papers 463, Queen Mary, University of London, Department of Economics. [Downloadable!]
  6. Takeyama, Lisa N, 1997. "The Intertemporal Consequences of Unauthorized Reproduction of Intellectual Property," Journal of Law & Economics, University of Chicago Press, vol. 40(2), pages 511-22, October.
  7. Varian, Hal R, 2000. "Buying, Sharing and Renting Information Goods," Journal of Industrial Economics, Blackwell Publishing, vol. 48(4), pages 473-88, December. [Downloadable!] (restricted)
  8. Oz Shy & Jacques-Françlois Thisse, 1999. "A Strategic Approach to Software Protection," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 8(2), pages 163-190, 06. [Downloadable!] (restricted)
  9. M. Alvisi & E. Argentesi & E. Carbonara, 2002. "Piracy and Quality Choice in Monopolistic Markets," Working Papers 436, Dipartimento Scienze Economiche, Università di Bologna. [Downloadable!]
    Other versions:
  10. Martin Peitz, 2004. "A Strategic Approach to Software Protection: Comment," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 13(2), pages 371-374, 06. [Downloadable!] (restricted)
  11. Liebowitz, S J, 1985. "Copying and Indirect Appropriability: Photocopying of Journals," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 945-57, October. [Downloadable!] (restricted)
  12. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  13. Rick Harbaugh & Rahul Khemka, . "Does Copyright Enforcement Encourage Piracy?," Claremont Colleges Working Papers 2000-14, Claremont Colleges. [Downloadable!]
  14. Banerjee, Dyuti S., 2003. "Software piracy: a strategic analysis and policy instruments," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 97-127, January. [Downloadable!] (restricted)
  15. Johnson, William R, 1985. "The Economics of Copying," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 158-74, February. [Downloadable!] (restricted)
  16. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-46, April. [Downloadable!] (restricted)
  17. Besen, Stanley M & Kirby, Sheila Nataraj, 1989. "Private Copying, Appropriability, and Optimal Copying Royalties," Journal of Law & Economics, University of Chicago Press, vol. 32(2), pages 255-80, October.
Full references

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.)

  1. P Belleflamme & P M Picard, 2003. "Competition over Piratable Goods," The School of Economics Discussion Paper Series 0332, Economics, The University of Manchester. [Downloadable!]
  2. Martin Peitz & Patrick Waelbroeck, 2004. "An Economist’s Guide to Digital Music," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
    • Martin Peitz & Patrick Waelbroeck, 2004. "An Economist's Guide to Digital Music," Discussion Papers 32, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  3. Patrick Legros, 2005. "Art and the Internet: Blessing the Curse?," Levine's Bibliography 666156000000000502, UCLA Department of Economics. [Downloadable!]
    Other versions:
  4. Peitz, Martin & Waelbroeck, Patrick, 2004. "The Effect of Internet Piracy on CD Sales: Cross-Section Evidence," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  5. Cremer, Helmuth & Pestieau, Pierre, 2006. "Piracy Prevention and the Pricing of Information Goods," CEPR Discussion Papers 5556, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Paul Belleflamme & Pierre Picard, 2004. "Piracy and Competition," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  7. Hoffmann, Magnus & Schmidt, Frederik, 2007. "Piracy of Digital Products: A Contest Theoretical Approach," MPRA Paper 3289, University Library of Munich, Germany. [Downloadable!]
  8. Oliver Gürtler, 2005. "On Strategic Enabling of Product Piracy in the Market for Video Games," Bonn Econ Discussion Papers bgse36_2005, University of Bonn, Germany. [Downloadable!]
  9. Ramayya Krishnan & Michael D. Smith & Zhulei Tang & Rahul Telang, 2007. "Digital Business Models for Peer-to-Peer Networks: Analysis and Economic Issue," Review of Network Economics, Concept Economics, vol. 6(2), pages 194-213, June. [Downloadable!]
  10. Nicolas Curien & François Moreau, 2007. "The Convergence between Content and Access: Internalizing the Market Complementarity," Review of Network Economics, Concept Economics, vol. 6(2), pages 161-174, June. [Downloadable!]
  11. Martin Peitz & Patrick Waelbroeck, 2004. "File-Sharing, Sampling, and Music Distribution," Discussion Papers 31, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  12. Alessandro Balestrino, 2007. "It is a Theft but not a Crime," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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