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The impact of piracy on innovation in the presence of technological and market uncertainty

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  • Banerjee, Dyuti
  • Chatterjee, Ishita

Abstract

With a single innovating firm facing only technological uncertainty, piracy unambiguously retards innovation. However, with R&D competition where firms face both market and technological uncertainties, we show that if the two firms differ "significantly" with respect to the efficiency in R&D investment, then piracy increases the R&D investment of the less efficient firm and reduces that of the more efficient firm. In this case piracy enhances the overall probability of a successful innovation.

Suggested Citation

  • Banerjee, Dyuti & Chatterjee, Ishita, 2010. "The impact of piracy on innovation in the presence of technological and market uncertainty," Information Economics and Policy, Elsevier, vol. 22(4), pages 391-397, December.
    • Handle: RePEc:eee:iepoli:v:22:y:2010:i:4:p:391-397
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    1. Rodrigo Nobre Fernandez & Felipe Garcia Ribeiro & Jean Del Ponte Duarte, 2018. "Effects of Software Piracy on Economic Growth," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(6), pages 1-11, June.
    2. Voßwinkel, Jan & Birg, Laura, 2015. "Minimum Quality Standards and Non-Compliance," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112883, Verein für Socialpolitik / German Economic Association.
    3. William M. Volckmann, 2023. "The effects of market size, wealth, and network effects on digital piracy and profit," European Journal of Law and Economics, Springer, vol. 55(1), pages 61-85, February.
    4. Caner Demir & Aykut Lenger, 2019. "Intellectual property rights and global imitation chains: the north–south–east model," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 549-569, July.
    5. Ming-Fang Tsai & Jiunn-Rong Chiou, 2012. "Counterfeiting, enforcement and social welfare," Journal of Economics, Springer, vol. 107(1), pages 1-21, September.
    6. Waters, James, 2015. "Welfare implications of piracy with dynamic pricing and heterogeneous consumers," European Journal of Operational Research, Elsevier, vol. 240(3), pages 904-911.
    7. Salahodjaev, Raufhon & Odilova, Shoirahon & Andrés, Antonio R., 2016. "Intelligence and Crime: A novel evidence for software piracy," MPRA Paper 71569, University Library of Munich, Germany.
    8. Banerjee, Dyuti, 2013. "Effect of piracy on innovation in the presence of network externalities," Economic Modelling, Elsevier, vol. 33(C), pages 526-532.
    9. Tsai, Ming-Fang & Chiou, Jiunn-Rong & Lin, Chun-Hung A., 2012. "A model of counterfeiting: A duopoly approach," Japan and the World Economy, Elsevier, vol. 24(4), pages 283-291.

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