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Piracy as an ethical decision

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  • Martyna Kobus

    ()
    (Faculty of Economic Sciences, University of Warsaw)

  • Michał Krawczyk

    ()
    (Faculty of Economic Sciences, University of Warsaw)

Abstract

We consider a monopolist producer of information goods that may be subject to unauthorized copying. The key feature of our model is that we allow consumers to have ethical concerns based on equity theory that may reduce their utility of such a copy. We derive the formulas describing demand for the product. We find that piracy reduces prices and producers' profit, an effect that can be limited by such measures as copyright enforcement (proxied by expected value of punishment for piracy) and anti-piracy campaigns. Welfare effects are also analyzed and generally turn out to be ambiguous.

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File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP107.pdf
File Function: First version, 2013
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Bibliographic Info

Paper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number 2013-22.

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Length: 19 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:war:wpaper:2013-22

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Keywords: digital piracy; copyright protection; equity theory;

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  1. Bagnoli, Mark & Khanna, Naveen, 1992. " Insider Trading in Financial Signaling Models," Journal of Finance, American Finance Association, American Finance Association, vol. 47(5), pages 1905-34, December.
  2. Flinn, Christopher J & Heckman, James J, 1983. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 1(1), pages 28-42, January.
  3. Bergstrom, T. & Bagnali, M., 1991. "Courtship as a Waiting Game," Papers, Michigan - Center for Research on Economic & Social Theory 91-3, Michigan - Center for Research on Economic & Social Theory.
  4. Paul Belleflamme & Martin Peitz, 2010. "Digital Piracy: Theory," CESifo Working Paper Series 3222, CESifo Group Munich.
  5. Landes, William M & Posner, Richard A, 1989. "An Economic Analysis of Copyright Law," The Journal of Legal Studies, University of Chicago Press, University of Chicago Press, vol. 18(2), pages 325-63, June.
  6. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, Elsevier, vol. 18(3), pages 303-320, September.
  7. 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.
  8. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 92(2), pages 236-46, April.
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