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What Is the True Loss Due to Piracy? Evidence from Microsoft Office in Hong Kong

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  • Tin Cheuk Leung

    (Chinese University of Hong Kong)

Abstract

Using a unique conjoint data set drawn from 281 college students in Hong Kong, I estimate a random-coefficient discrete choice demand system for Microsoft Office from legal and various illegal sources. Counterfactual results show two things. First, most students would switch to Internet piracy even if the government eradicated street piracy. This explains why software piracy in Hong Kong remains well above 40% despite the government's successful measures to bring down street piracy. Second, the true gain from shutting off all sources of piracy is HK$48.6 (US$6) per person, only 15% of the Business Software Alliance's estimated cost of piracy. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Tin Cheuk Leung, 2013. "What Is the True Loss Due to Piracy? Evidence from Microsoft Office in Hong Kong," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 1018-1029, July.
    • Handle: RePEc:tpr:restat:v:95:y:2013:i:3:p:1018-1029
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    Cited by:

    1. Chao, Hong & Ho, Chun-Yu & Leung, Tin Cheuk & Ng, Travis, 2017. "To root or not to root? The economics of jailbreak," Journal of Comparative Economics, Elsevier, vol. 45(3), pages 481-497.
    2. Leung, Tin Cheuk, 2015. "Music piracy: Bad for record sales but good for the iPod?," Information Economics and Policy, Elsevier, vol. 31(C), pages 1-12.
    3. Ackermann, Klaus & Bradley, Wendy A. & Cameron, Jack Francis, 2025. "Avengers assemble! When digital piracy increases box office demand," Research Policy, Elsevier, vol. 54(8).
    4. Keisuke Hattori & Keisaku Higashida, 2023. "Who should be regulated: Genuine producers or third parties?," Journal of Economics, Springer, vol. 138(3), pages 249-286, April.
    5. Szabó, Andrea & Pham, Vinh, 2022. "Net neutrality and consumer demand in the video on-demand market," Information Economics and Policy, Elsevier, vol. 61(C).
    6. Milan Miric & Lars Bo Jeppesen, 2020. "Does piracy lead to product abandonment or stimulate new product development?: Evidence from mobile platform‐based developer firms," Strategic Management Journal, Wiley Blackwell, vol. 41(12), pages 2155-2184, December.
    7. Kanazawa, Kyogo & Kawaguchi, Kohei, 2022. "Displacement effects of public libraries," Journal of the Japanese and International Economies, Elsevier, vol. 66(C).
    8. Carsten Fink & Keith E. Maskus & Yi Qian, 2016. "The Economic Effects of Counterfeiting and Piracy: A Review and Implications for Developing Countries," The World Bank Research Observer, World Bank, vol. 31(1), pages 1-28.

    More about this item

    Keywords

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    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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