IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v39y2015i8p735-744.html
   My bibliography  Save this article

The impact of piracy on prominent and non-prominent software developers

Author

Listed:
  • Rasch, Alexander
  • Wenzel, Tobias

Abstract

This paper studies the impact of software piracy on prominent and non-prominent software developers in markets based on a two-sided platform business. User behavior is imperfect and, when adopting a platform, users only take prominent software into account. We show that prominent software exhibits higher piracy rates than non-prominent software. However, contrary to intuition, this does not necessarily mean that prominent software developers benefit more from increased software protection. Indeed, we show that prominent developers may lose out whereas non-prominent developers may gain from better software protection.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:telpol:v:39:y:2015:i:8:p:735-744
    DOI: 10.1016/j.telpol.2014.11.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596114001839
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.telpol.2014.11.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Zhou, Jidong, 2009. "Prominence and Consumer Search: The Case With Multiple Prominent Firms," MPRA Paper 12554, University Library of Munich, Germany.
    3. Caillaud, Bernard & Jullien, Bruno, 2003. "Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    4. Mark Armstrong & John Vickers & Jidong Zhou, 2009. "Prominence and consumer search," RAND Journal of Economics, RAND Corporation, vol. 40(2), pages 209-233, June.
    5. Mark Armstrong & John Vickers, 2012. "Consumer Protection and Contingent Charges," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 477-493, June.
    6. Belleflamme, Paul & Peitz, Martin, 2010. "Platform competition and seller investment incentives," European Economic Review, Elsevier, vol. 54(8), pages 1059-1076, November.
    7. Jay Pil Choi, 2010. "Tying In Two‐Sided Markets With Multi‐Homing," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 607-626, September.
    8. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    9. Xavier Gabaix & David Laibson, 2018. "Shrouded attributes, consumer myopia and information suppression in competitive markets," Chapters, in: Victor J. Tremblay & Elizabeth Schroeder & Carol Horton Tremblay (ed.), Handbook of Behavioral Industrial Organization, chapter 3, pages 40-74, Edward Elgar Publishing.
    10. Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    11. Wendy J. Gordon & Richard Watt (ed.), 2003. "The Economics of Copyright," Books, Edward Elgar Publishing, number 2998.
    12. Yiquan Gu & Tobias Wenzel, 2014. "Strategic Obfuscation and Consumer Protection Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 62(4), pages 632-660, December.
    13. Yoon, Kiho, 2002. "The optimal level of copyright protection," Information Economics and Policy, Elsevier, vol. 14(3), pages 327-348, September.
    14. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
    15. Andrei Hagiu, 2009. "Two‐Sided Platforms: Product Variety and Pricing Structures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1011-1043, December.
    16. ,, 2006. "Competition over agents with boundedly rational expectations," Theoretical Economics, Econometric Society, vol. 1(2), pages 207-231, June.
    17. Gayer, Amit & Shy, Oz, 2006. "Publishers, artists, and copyright enforcement," Information Economics and Policy, Elsevier, vol. 18(4), pages 374-384, November.
    18. Huck, Steffen & Zhou, Jidong, 2011. "Consumer behavioural biases in competition: A survey," MPRA Paper 31794, University Library of Munich, Germany.
    19. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    20. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
    21. Spiegler, Ran, 2014. "Bounded Rationality and Industrial Organization," OUP Catalogue, Oxford University Press, number 9780199334261, Decembrie.
    22. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
    23. Christiaan Hogendorn & Stephen Ka Yat Yuen, 2009. "Platform Competition With ‘Must‐Have’ Components," Journal of Industrial Economics, Wiley Blackwell, vol. 57(2), pages 294-318, June.
    24. Andrei Hagiu, 2006. "Pricing and Commitment by Two-Sided Platforms," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 720-737, Autumn.
    25. Mark Armstrong & Jidong Zhou, 2011. "Paying for Prominence," Economic Journal, Royal Economic Society, vol. 121(556), pages 368-395, November.
    26. Oz Shy & Jacques‐Françlois Thisse, 1999. "A Strategic Approach to Software Protection," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 163-190, June.
    27. Martin Peitz, 2004. "A Strategic Approach to Software Protection: Comment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(2), pages 371-374, June.
    28. Mark Armstrong Author-Email: mark.armstrong@ucl.ac.uk Author-Workplace-Name: University College of London, 2006. "Competition in Two-Sided Markets," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 668-691, Autumn.
    29. Peitz, Martin & Waldfogel, Joel, 2012. "The Oxford Handbook of the Digital Economy," OUP Catalogue, Oxford University Press, number 9780195397840, Decembrie.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    2. 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.
    3. 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.
    4. David S. Evans & Richard Schmalensee, 2013. "The Antitrust Analysis of Multi-Sided Platform Businesses," NBER Working Papers 18783, National Bureau of Economic Research, Inc.
    5. Kresimir Zigic & Jiri Strelicky & Michal Kunin, 2020. "Private and Public IPR Protection in a Vertically Differentiated Software Duopoly," CERGE-EI Working Papers wp671, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    6. Paul Belleflamme & Martin Peitz, 2019. "Managing competition on a two‐sided platform," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 5-22, January.
    7. Jeon, Doh-Shin & Jullien, Bruno & Klimenko, Mikhail, 2021. "Language, internet and platform competition," Journal of International Economics, Elsevier, vol. 131(C).
    8. Yiquan Gu & Tobias Wenzel, 2014. "Strategic Obfuscation and Consumer Protection Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 62(4), pages 632-660, December.
    9. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    10. Economides, Nicholas & Tåg, Joacim, 2012. "Network neutrality on the Internet: A two-sided market analysis," Information Economics and Policy, Elsevier, vol. 24(2), pages 91-104.
    11. Jullien, Bruno, 2010. "Two-Sided B2B Platforms," TSE Working Papers 11-223, Toulouse School of Economics (TSE), revised Mar 2011.
    12. Chioveanu, Ioana, 2019. "Prominence, complexity, and pricing," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 551-582.
    13. Piolatto, Amedeo & Schuett, Florian, 2012. "Music piracy: A case of “The Rich Get Richer and the Poor Get Poorer”," Information Economics and Policy, Elsevier, vol. 24(1), pages 30-39.
    14. Yong Chao & Timothy Derdenger, 2013. "Mixed Bundling in Two-Sided Markets in the Presence of Installed Base Effects," Management Science, INFORMS, vol. 59(8), pages 1904-1926, August.
    15. Peters, Frank, 2018. "The business of video games is a multi-player game : Essays on governance choices and performance in a two-sided market in the cultural industries," Other publications TiSEM 886b3148-4bbb-4ea4-b666-0, Tilburg University, School of Economics and Management.
    16. Inceoglu, Firat, 2015. "Copyright protection and entry deterrence," Information Economics and Policy, Elsevier, vol. 32(C), pages 38-45.
    17. Žigić, Krešimir & Střelický, Jiří & Kúnin, Michael, 2023. "Copyright and firms’ own IPR protection in a software market: Monopoly versus duopoly," Economic Modelling, Elsevier, vol. 123(C).
    18. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    19. Reisinger, Markus, 2014. "Two-part tariff competition between two-sided platforms," European Economic Review, Elsevier, vol. 68(C), pages 168-180.
    20. Pinar Ozcan & Filipe M. Santos, 2015. "The market that never was: Turf wars and failed alliances in mobile payments," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1486-1512, October.

    More about this item

    Keywords

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:telpol:v:39:y:2015:i:8:p:735-744. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.