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The economics of IPR protection policies

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  • Gil, Ricard

    ()
    (University of California, Santa Cruz)

Abstract

In this paper, we model competition between legal and pirate products. In our framework, the government affects this competition through police spending and taxes on legal products. Therefore, the government can choose the combination of spending and taxes that best fits its goals. We find that governments that focus entirely on eradicating piracy use lower levels of taxes and police spending than governments that focus on maximizing consumption, consumer surplus, welfare or government size. This result highlights the importance of demand side policies in the fight against piracy and posts a challenge to the traditional solo approach of supply side policies.

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Bibliographic Info

Paper provided by IESE Business School in its series IESE Research Papers with number D/622.

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Length: 23 pages
Date of creation: 03 Mar 2006
Date of revision:
Handle: RePEc:ebg:iesewp:d-0622

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Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
Web page: http://www.iese.edu/
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Related research

Keywords: piracy; pirate products; intellectual property rights; illegal copying; demand side policies;

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  1. Rafael Rob & Joel Waldfogel, 2004. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," NBER Working Papers 10874, National Bureau of Economic Research, Inc.
  2. 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.
  3. Yeh-ning Chen & I.P.L. Png, 2004. "Parallel Imports and Music CD Prices," International Trade 0401005, EconWPA.
  4. Takeyama, Lisa N, 1997. "The Intertemporal Consequences of Unauthorized Reproduction of Intellectual Property," Journal of Law and Economics, University of Chicago Press, vol. 40(2), pages 511-22, October.
  5. Benjamin Klein & Andres V. Lerner & Kevin M. Murphy, 2002. "The Economics of Copyright "Fair Use" in a Networked World," American Economic Review, American Economic Association, vol. 92(2), pages 205-208, May.
  6. Hal R. Varian, 2005. "Copying and Copyright," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 121-138, Spring.
  7. Hui Kai-Lung & Png Ivan, 2003. "Piracy and the Legitimate Demand for Recorded Music," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-24, September.
  8. Wauthy, Xavier, 1996. "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 345-53, September.
  9. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  10. Dam, Kenneth W, 1999. "Self-Help in the Digital Jungle," The Journal of Legal Studies, University of Chicago Press, vol. 28(2), pages 393-412, June.
  11. David Blackburn, 2002. "Complementarities and network externalities in casually copied goods," Estudios de Economia, University of Chile, Department of Economics, vol. 29(1 Year 20), pages 71-88, June.
  12. William Landes & Douglas Lichtman, 2003. "Indirect Liability for Copyright Infringement: Napster and Beyond," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 113-124, Spring.
  13. Paul Romer, 2002. "When Should We Use Intellectual Property Rights?," American Economic Review, American Economic Association, vol. 92(2), pages 213-216, May.
  14. Joshua Slive & Dan Bernhardt, 1998. "Pirated for Profit," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 886-899, November.
  15. Stanley M. Besen & Leo J. Raskind, 1991. "An Introduction to the Law and Economics of Intellectual Property," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 3-27, Winter.
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