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Is It Worth Taxing Pirated Products? The Case of Optical Media Discs in the Philippines


  • Desiree A. Desierto

    (University of the Philippines, School of Economics, Diliman, Q.C. 1101, Philippines.)

  • Karen Annette D. Lazaro

    (University of the Philippines, School of Economics, Diliman, Q.C. 1101, Philippines.)

  • Kevin Thomas G. Cruz

    (University of the Philippines, School of Economics, Diliman, Q.C. 1101, Philippines.)


This paper questions the conventional argument that the existence of a black market provides negative externalities in the form of foregone tax revenues that could otherwise be used to increase social welfare. It is not enough to estimate the size of the black market, one should also show how much of this can be eradicated, and how much of what is eradicated can be replaced by legitimate (taxable) goods, and how much of what is replaced can generate actual tax revenue. When all these are taken into account, the actual tax loss from piracy may be trivial. We illustrate this point using time-series data on optical media disc piracy in the Philippines. (c) 2010 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Desiree A. Desierto & Karen Annette D. Lazaro & Kevin Thomas G. Cruz, 2010. "Is It Worth Taxing Pirated Products? The Case of Optical Media Discs in the Philippines," Asian Economic Papers, MIT Press, vol. 9(2), pages 79-112, Summer.
  • Handle: RePEc:tpr:asiaec:v:9:y:2010:i:2:p:79-112

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    References listed on IDEAS

    1. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, January.
    2. John B. Taylor, 2009. "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong," NBER Working Papers 14631, National Bureau of Economic Research, Inc.
    3. McKibbin, Warwick J. & Pearce, David & Stegman, Alison, 2007. "Long term projections of carbon emissions," International Journal of Forecasting, Elsevier, vol. 23(4), pages 637-653.
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