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Impact of Network Externality on End-User Piracy: Revisited

Author

Listed:
  • Sougata Poddar

    () (University of Redlands, CA, USA)

  • Yuanzhu Lu

    () (Central University of Finance and Economics, Beijing)

Abstract

We revisit the issue whether a strong presence of network externality in the digital products market could be a reason for the copyright holders to allow piracy. We find that except under a limited circumstance this is not true in a framework that involves IPR protection and copyright holder's costly effort to prevent piracy. We further show that as the degree of network externality increases, the strategic piracy deterrence level of the copyright holder increases and the actual rate of piracy decreases.

Suggested Citation

  • Sougata Poddar & Yuanzhu Lu, 2017. "Impact of Network Externality on End-User Piracy: Revisited," Economics Bulletin, AccessEcon, vol. 37(3), pages 1457-1467.
  • Handle: RePEc:ebl:ecbull:eb-17-00007
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I3-P132.pdf
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    References listed on IDEAS

    as
    1. 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 155-166, June.
    2. 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.
    3. Joshua Slive & Dan Bernhardt, 1998. "Pirated for Profit," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 886-899, November.
    4. King, Stephen P. & Lampe, Ryan, 2003. "Network externalities, price discrimination and profitable piracy," Information Economics and Policy, Elsevier, vol. 15(3), pages 271-290, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Digital Piracy; Network Externality; Consumer taste; Product quality;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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