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Modeling Software Piracy Protection: Monopoly versus Duopoly

Listed author(s):
  • Kresimir Zigic
  • Jiri Strelicky
  • Michael Kunin

The economic analyses of software piracy typically rely on the simplifying assumption that the product is o¤ered by a single producer. We argue that a realistic description of the software market and associated economic aspects of software piracy might be also captured by studying competition between software developers. Using an illegal version of software violates intellectual property rights (IPR) and, due to public protection (such as copyrights), is punishable when discovered. If a developer nonetheless considers the level of piracy to be high, he may introduce his own private protection. The focus of our analysis is on the interaction between public and private IPR protection in the two market structures under considerations. We show that, unlike in cases of monopolies, there is no conflict of interest between the regulator and producers in duopoly setup. Moreover, unlike in a monopoly, the optimal public IPR protection in duopoly does not affect the developers' choice of software quality.

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Paper provided by The Center for Economic Research and Graduate Education - Economics Institute, Prague in its series CERGE-EI Working Papers with number wp551.

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Date of creation: Oct 2015
Handle: RePEc:cer:papers:wp551
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  15. Stavins, Joanna, 1995. "Model Entry and Exit in a Differentiated-Product Industry: The Personal Computer Market," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 571-584, November.
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  17. Dyuti S. Banerjee & Tanmoyee Banerjee (Chatterjee) & Ajitava Raychaudhuri, 2008. "Optimal Enforcement And Anti-Copying Strategies To Counter Copyright Infringement," The Japanese Economic Review, Japanese Economic Association, vol. 59(4), pages 519-535.
  18. Matsumura, Toshihiro & Ogawa, Akira, 2014. "Inefficient but robust public leadership," MPRA Paper 56539, University Library of Munich, Germany.
  19. Minniti, Antonio & Vergari, Cecilia, 2010. "Turning Piracy into Profits: a Theoretical Investigation," Information Economics and Policy, Elsevier, vol. 22(4), pages 379-390, December.
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