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Piracy in a two-sided software market

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  • Rasch, Alexander
  • Wenzel, Tobias

Abstract

This paper studies the impact of software piracy in a two-sided-market setting. Software platforms attract developers and users to maximize their profits. The equilibrium price structure is affected by piracy: license fees to developers are higher with more software protection but the impact on user prices is ambiguous. A conflict between platforms and software developers over software protection may arise: whereas one side benefits from better protection, the other party loses out. Under platform compatibility, this conflict is no longer present.

Suggested Citation

  • Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    • Handle: RePEc:eee:jeborg:v:88:y:2013:i:c:p:78-89
    DOI: 10.1016/j.jebo.2013.01.009
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    Cited by:

    1. Sui, Ronghua & Zhang, Xumei & Dan, Bin & Zhang, Haiyue & Liu, Yi, 2023. "Bilateral value-added service investment in platform competition with cross-side network effects under multihoming," European Journal of Operational Research, Elsevier, vol. 304(3), pages 952-963.
    2. Maxwell Sandada & Nyarai Simbarashe & Roy Shamhuyenhanzva, 2016. "Determining the Impact of Selected Success Factors on the Adoption of EBanking in the Zimbabwean Banking Industry," EuroEconomica, Danubius University of Galati, issue 2(35), pages 102-118, November.
    3. Elias Carroni & Leonardo Madio & Shiva Shekhar, 2019. "Superstar Exclusivity in Two-Sided Markets," CESifo Working Paper Series 7535, CESifo.
    4. Rasch, Alexander & Wenzel, Tobias, 2015. "The impact of piracy on prominent and non-prominent software developers," Telecommunications Policy, Elsevier, vol. 39(8), pages 735-744.
    5. Kao, Kuo-Feng & Mukunoki, Hiroshi, 2021. "The effects of parallel trade in two-sided markets," Economics Letters, Elsevier, vol. 199(C).
    6. Thomes, Tim Paul, 2015. "In-house publishing and competition in the video game industry," Information Economics and Policy, Elsevier, vol. 32(C), pages 46-57.
    7. Ralf Dewenter & Justus Haucap & Tobias Wenzel, 2012. "On File Sharing With Indirect Network Effects Between Concert Ticket Sales and Music Recordings," Journal of Media Economics, Taylor & Francis Journals, vol. 25(3), pages 168-178, September.
    8. Shekhar, Shiva, 2017. "Homing choice and platform pricing strategy," DICE Discussion Papers 247, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    9. Xiaoying Cheng & Lifeng Mu & Yanhong Sun & Yiwen Bian, 2018. "Optimal Pricing Decisions for the Online Video Platform Under Customer Choice," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(01), pages 1-21, February.
    10. KAO Kuo-Feng & MUKUNOKI Hiroshi, 2022. "Optimal Tariffs on a Monopoly Platform in Two-sided Markets," Discussion papers 22066, Research Institute of Economy, Trade and Industry (RIETI).
    11. Huixin Liu & Feng Du, 2023. "Research on E-Commerce Platforms’ Return Policies Considering Consumers Abusing Return Policies," Sustainability, MDPI, vol. 15(18), pages 1-19, September.
    12. Nikolay Zenkevich & Margarita Gladkova, 2016. "Price Competition on the Market of Counterfeiting Software," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(02), pages 1-10, June.
    13. Leonardo Madio & Carroni, Elias & Shekhar, Shiva, 2019. "Superstars in two-sided markets: exclusives or not?," 2019 Papers pma2756, Job Market Papers.
    14. Gold, Alex & Hogendorn, Christiaan, 2016. "Tipping in two-sided markets with asymmetric platforms," Economic Analysis and Policy, Elsevier, vol. 50(C), pages 85-90.
    15. Emanuele Bacchiega & Elias Carroni & Alessandro Fedele, 2023. "Monopolistic Duopoly," BEMPS - Bozen Economics & Management Paper Series BEMPS101, Faculty of Economics and Management at the Free University of Bozen.
    16. Martínez-Sánchez, Francisco, 2020. "Preventing commercial piracy when consumers are loss averse," Information Economics and Policy, Elsevier, vol. 53(C).
    17. Masakazu Ishihara & Eitan Muller, 2020. "Software piracy and outsourcing in two-sided markets," Quantitative Marketing and Economics (QME), Springer, vol. 18(1), pages 61-124, March.
    18. Tavalaei, M. Mahdi, 2020. "Waiting time in two-sided platforms: The case of the airport industry," Technological Forecasting and Social Change, Elsevier, vol. 159(C).

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    More about this item

    Keywords

    Developer; Piracy; Platform; Software; Two-sided market;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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