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Versioning of information goods under the threat of piracy

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  • Cho, Won-Young
  • Ahn, Byong-Hun

Abstract

The present study investigates the effects of piracy on the quality decisions of a firm that produces two versions of an information good: that is, one version for a consumer with a high willingness to pay and a second version for a consumer with a low willingness to pay. On the assumption that there is no quality difference between the original and the illegal copy and that the cost of the copy is constant across users, we show that the presence of piracy induces the firm to choose a lower level of quality of the former and a higher level of quality of the latter relative to decisions made in the absence of piracy. We also discuss policy implications concerning the socially optimal level of copyright protection.

Suggested Citation

  • Cho, Won-Young & Ahn, Byong-Hun, 2010. "Versioning of information goods under the threat of piracy," Information Economics and Policy, Elsevier, vol. 22(4), pages 332-340, December.
    • Handle: RePEc:eee:iepoli:v:22:y:2010:i:4:p:332-340
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    References listed on IDEAS

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    Cited by:

    1. Raphaël Suire & Thierry Pénard & Sylvain Dejean, 2010. "La gratuité est-elle une fatalité sur les marchés numériques ? Une étude sur le consentement à payer pour des offres de contenus audiovisuels sur internet," Économie et Prévision, Programme National Persée, vol. 194(3), pages 15-32.
    2. Atanu Lahiri & Debabrata Dey, 2013. "Effects of Piracy on Quality of Information Goods," Management Science, INFORMS, vol. 59(1), pages 245-264, June.
    3. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    4. Yi, Zelong & Li, Fan & Ma, Lijun, 2019. "The impact of distribution channels on trial-version provision with a positive network effect," Omega, Elsevier, vol. 85(C), pages 115-133.
    5. Nie, Jiajia & Zhong, Ling & Li, Gendao & Cao, Kuo, 2022. "Piracy as an entry deterrence strategy in software market," European Journal of Operational Research, Elsevier, vol. 298(2), pages 560-572.
    6. Paulomi Basu & Tanmoyee Banerjee, 2018. "A Theoretical Analysis Of Product Versioning In The Context Of Commercial Piracy," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 63(219), pages 115-136, October –.
    7. Debabrata Dey & Antino Kim & Atanu Lahiri, 2019. "Online Piracy and the “Longer Arm” of Enforcement," Management Science, INFORMS, vol. 65(3), pages 1173-1190, March.
    8. Matthew J. Hashim & Karthik N. Kannan & Sandra Maximiano, 2017. "Information Feedback, Targeting, and Coordination: An Experimental Study," Information Systems Research, INFORMS, vol. 28(2), pages 289-308, June.

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