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Piracy as an ethical decision

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Author Info

  • 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
Download Restriction: no

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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Related research

Keywords: digital piracy; copyright protection; equity theory;

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  1. Bergstrom, Theodore C & Bagnoli, Mark, 1993. "Courtship as a Waiting Game," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 185-202, February.
  2. Paul Belleflamme & Martin Peitz, 2010. "Digital Piracy: Theory," CESifo Working Paper Series 3222, CESifo Group Munich.
  3. 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.
  4. Landes, William M & Posner, Richard A, 1989. "An Economic Analysis of Copyright Law," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 325-63, June.
  5. 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.
  6. Christopher J. Flinn & James J. Heckman, 1982. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," NBER Working Papers 0979, National Bureau of Economic Research, Inc.
  7. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
  8. Bagnoli, Mark & Khanna, Naveen, 1992. " Insider Trading in Financial Signaling Models," Journal of Finance, American Finance Association, vol. 47(5), pages 1905-34, December.
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