IDEAS home Printed from
   My bibliography  Save this article

Price Competition on the Market of Counterfeiting Software


  • Nikolay Zenkevich

    (Graduate School of Management, St. Petersburg State University, Volkhovsky per., 3, St. Petersburg, 199004, Russia)

  • Margarita Gladkova

    (Graduate School of Management, St. Petersburg State University, Volkhovsky per., 3, St. Petersburg, 199004, Russia)


In this paper, the market of software products is considered. Regularly this market is suffering from existence of counterfeit or pirate products which causes problems and challenges for original software developers. Taking this fact into account the paper is trying to solve the problem of price competition on this market. The software company set the price and the quality of the software product while the counterfeit or pirate company suggests the consumers the product of the lower quality. First the general model is analyzed and price equilibrium is defined. Second, the monopoly case is considered separately and optimal software price is defined. Finally, it is supposed that there are two companies that produce original software on the market who compete and differentiate in product quality, and there are two pirate companies who produce the same type of software. The duopoly case is analyzed and equilibrium prices for competing companies are obtained in the explicit form.

Suggested Citation

  • 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.
  • Handle: RePEc:wsi:igtrxx:v:18:y:2016:i:02:n:s0219198916400065
    DOI: 10.1142/S0219198916400065

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers

    File URL:
    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 search for a different version of it.

    References listed on IDEAS

    1. Sanjay Jain, 2008. "Digital Piracy: A Competitive Analysis," Marketing Science, INFORMS, vol. 27(4), pages 610-626, 07-08.
    2. Ming-Fang Tsai & Jiunn-Rong Chiou, 2012. "Counterfeiting, enforcement and social welfare," Journal of Economics, Springer, vol. 107(1), pages 1-21, September.
    3. Leon A Petrosyan & Nikolay A Zenkevich, 2016. "Game Theory," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 9824.
    4. Francisco Martinez-Sanchez, 2011. "Collusion, competition and piracy," Applied Economics Letters, Taylor & Francis Journals, vol. 18(11), pages 1043-1047.
    5. Jie Zhang & L. Hong & Rachel Zhang, 2012. "Fighting strategies in a market with counterfeits," Annals of Operations Research, Springer, vol. 192(1), pages 49-66, January.
    6. Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    7. Dave Furth, 2011. "Duopoly Models With Vertical Product Differentiation," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 121-140.
    8. T. S. Raghu & Rajiv Sinha & Ajay Vinze & Orneita Burton, 2009. "Willingness to Pay in an Open Source Software Environment," Information Systems Research, INFORMS, vol. 20(2), pages 218-236, June.
    9. Kogan, Konstantin & Ozinci, Yaacov & Perlman, Yael, 2013. "Containing piracy with product pricing, updating and protection investments," International Journal of Production Economics, Elsevier, vol. 144(2), pages 468-478.
    Full references (including those not matched with items on IDEAS)

    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. Can Sun & Yonghua Ji & Xianjun Geng, 2023. "Which Enemy to Dance with? A New Role of Software Piracy in Influencing Antipiracy Strategies," Information Systems Research, INFORMS, vol. 34(4), pages 1711-1727, December.
    2. Dan Wu & Guofang Nan & Minqiang Li, 2020. "Optimal Piracy Control: Should a Firm Implement Digital Rights Management?," Information Systems Frontiers, Springer, vol. 22(4), pages 947-960, August.
    3. Avinadav, Tal & Chernonog, Tatyana & Perlman, Yael, 2014. "Analysis of protection and pricing strategies for digital products under uncertain demand," International Journal of Production Economics, Elsevier, vol. 158(C), pages 54-64.
    4. Wang, Yingjia & Lin, Jiaxin & Choi, Tsan-Ming, 2020. "Gray market and counterfeiting in supply chains: A review of the operations literature and implications to luxury industries," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    5. 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).
    6. Luis Aguiar & Jörg Claussen & Christian Peukert, 2018. "Catch Me If You Can: Effectiveness and Consequences of Online Copyright Enforcement," Information Systems Research, INFORMS, vol. 29(3), pages 656-678, September.
    7. Zhang, Jie & Zhang, Rachel Q., 2015. "Supply chain structure in a market with deceptive counterfeits," European Journal of Operational Research, Elsevier, vol. 240(1), pages 84-97.
    8. 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.
    9. 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.
    10. Martínez-Sánchez, Francisco, 2020. "Preventing commercial piracy when consumers are loss averse," Information Economics and Policy, Elsevier, vol. 53(C).
    11. Marta Biancardi & Andrea Di Liddo & Giovanni Villani, 2022. "How do Fines and Their Enforcement on Counterfeit Products Affect Social Welfare?," Computational Economics, Springer;Society for Computational Economics, vol. 60(4), pages 1547-1573, December.
    12. Saglam, Ismail, 2016. "An Alternative Characterization for Iterated Kalai-Smorodinsky-Nash Compromise," MPRA Paper 73564, University Library of Munich, Germany.
    13. Yurong Chen & Juan Zhang, 2024. "Impact of Consumer Subsidy Considering Subsidy Threshold on New Energy Vehicle Firms and Environmental Benefits," Sustainability, MDPI, vol. 16(6), pages 1-22, March.
    14. Ismail Saglam, 2017. "Iterated Kalai–Smorodinsky–Nash compromise," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 40(1), pages 335-349, November.
    15. Khouja, Moutaz & Wang, Yulan, 2010. "The impact of digital channel distribution on the experience goods industry," European Journal of Operational Research, Elsevier, vol. 207(1), pages 481-491, November.
    16. Bian, Junsong & Zhang, Guoqing & Zhou, Guanghui, 2023. "The strategic impact of vertical integration on non-deceptive counterfeiting," International Journal of Production Economics, Elsevier, vol. 260(C).
    17. Miglo, Anton & Zenkevich, Nikolay, 2005. "Non-hierarchical signalling: two-stage financing game," MPRA Paper 1264, University Library of Munich, Germany, revised 2006.
    18. Javier Frutos & Guiomar Martín-Herrán, 2015. "Does Flexibility Facilitate Sustainability of Cooperation Over Time? A Case Study from Environmental Economics," Journal of Optimization Theory and Applications, Springer, vol. 165(2), pages 657-677, May.
    19. 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.
    20. Juan Zhang & Ziyue Wang & Huiju Zhao, 2020. "The Impact of Consumer Subsidy on Green Technology Innovations for Vehicles and Environmental Impact," IJERPH, MDPI, vol. 17(20), pages 1-24, October.


    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:wsi:igtrxx:v:18:y:2016:i:02:n:s0219198916400065. 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: Tai Tone Lim (email available below). General contact details of provider: .

    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.