Does Copyright Enforcement Encourage Piracy?
AbstractMore intensive copyright enforcement reduces piracy, raises prices, and lowers consumer surplus. We show that these results do not hold regarding the extent rather than intensity of enforcement. When enforcement is targeted at high-value buyers such as corporate and government users, the copyright holder has an incentive to charge super-monopoly prices, thereby encouraging piracy among low-value buyers. Extending enforcement down the demand curve broadens the copyright holder’s captive market, leading to lower prices and higher sales that can increase both profits and consumer surplus. The standard tradeoff between the incentive to generate intellectual property and the cost of monopoly power is therefore avoided. Private enforcement by copyright holders may be insuciently extensive since consumers can also benefit from more extensive enforcement. Similarly, new technologies which lead to stronger control over illicit use can paradoxically benefit consumers.
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piracy; internet; intellectual property; copyright protection; super-monopoly pricing;
Find related papers by JEL classification:
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-07-13 (All new papers)
- NEP-LAW-2001-07-13 (Law & Economics)
- NEP-TID-2001-07-13 (Technology & Industrial Dynamics)
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