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Piracy of Digital Products: A Critical Review of the Economics Literature

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  • Martin Peitz
  • Patrick Waelbroeck

Abstract

Digital products have the property that they can be copied almost costlessly. This makes them candidates for non-commercial copying by final consumers. Because the copy of a copy typically does not deteriorate in quality, copying products can become a wide-spread phenomenon – this can be illustrated by the surge of file-sharing networks. In this paper we provide a critical overview of the literature that addresses the economic consequences of end-user copying. We conclude that some models with network effects are well-suited for the analysis of software copying while other models incorporating the feature that copies provide information about the originals may be useful for the analysis of digital music copying.

Suggested Citation

  • Martin Peitz & Patrick Waelbroeck, 2003. "Piracy of Digital Products: A Critical Review of the Economics Literature," CESifo Working Paper Series 1071, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1071
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    References listed on IDEAS

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    Cited by:

    1. Cremer, Helmuth & Pestieau, Pierre, 2009. "Piracy prevention and the pricing of information goods," Information Economics and Policy, Elsevier, vol. 21(1), pages 34-42, February.
    2. Paul Belleflamme & Pierre M. Picard, 2007. "Piracy and Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 351-383, June.
    3. Oliver Gürtler, 2009. "On pricing and protection of complementary products," Review of Managerial Science, Springer, vol. 3(3), pages 209-223, November.
    4. Jehoshua Eliashberg & Anita Elberse & Mark A.A.M. Leenders, 2006. "The Motion Picture Industry: Critical Issues in Practice, Current Research, and New Research Directions," Marketing Science, INFORMS, vol. 25(6), pages 638-661, 11-12.
    5. Oliver Gürtler, 2005. "On Strategic Enabling of Product Piracy in the Market for Video Games," Bonn Econ Discussion Papers bgse36_2005, University of Bonn, Germany.
    6. Balestrino, Alessandro, 2008. "It is a theft but not a crime," European Journal of Political Economy, Elsevier, vol. 24(2), pages 455-469, June.
    7. P Belleflamme & P M Picard, 2003. "Competition over Piratable Goods," The School of Economics Discussion Paper Series 0332, Economics, The University of Manchester.
    8. Mandel Philipp & Süssmuth Bernd, 2012. "Determinants of Digital Piracy: A Re-examination of Results," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(4), pages 394-413, August.
    9. Connolly, Marie & Krueger, Alan B., 2006. "Rockonomics: The Economics of Popular Music," Handbook of the Economics of Art and Culture, Elsevier.
    10. Martin Peitz & Patrick Waelbroeck, 2004. "The Effect of Internet Piracy on CD Sales: Cross-Section Evidence," CESifo Working Paper Series 1122, CESifo Group Munich.
    11. Duchene, Anne & Waelbroeck, Patrick, 2006. "The legal and technological battle in the music industry: Information-push versus information-pull technologies," International Review of Law and Economics, Elsevier, vol. 26(4), pages 565-580, December.
    12. Alessandro Balestrino, 2012. "Taxes, Status Goods, and Piracy," CESifo Working Paper Series 3704, CESifo Group Munich.
    13. Martin Peitz & Patrick Waelbroeck, 2005. "An Economist's Guide to Digital Music," CESifo Economic Studies, CESifo, vol. 51(2-3), pages 359-428.
    14. Patrick Legros, 2005. "Art and the Internet: Blessing the Curse?," Levine's Bibliography 666156000000000502, UCLA Department of Economics.
    15. Pierre-Jean Benghozi, 2008. "Effet long tail ou effet podium : une anlyse empirique des ventes de produits culturels en France," Post-Print hal-00407205, HAL.
    16. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," NBER Chapters,in: Innovation Policy and the Economy, Volume 10, pages 19-55 National Bureau of Economic Research, Inc.
    17. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
    18. Eric Chiang & Djeto Assane, 2007. "Determinants of music copyright violations on the university campus," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 31(3), pages 187-204, September.
    19. Smith, Michael D. & Telang, Rahul, 2010. "Piracy or promotion? The impact of broadband Internet penetration on DVD sales," Information Economics and Policy, Elsevier, vol. 22(4), pages 289-298, December.
    20. Hoffmann, Magnus & Schmidt, Frederik, 2007. "Piracy of Digital Products: A Contest Theoretical Approach," MPRA Paper 3289, University Library of Munich, Germany.
    21. Peitz, Martin & Waelbroeck, Patrick, 2004. "File-Sharing, Sampling, and Music Distribution," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 31, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    22. Marie Connolly & Alan Krueger, 2005. "Rockonomics: The Economics of Popular Music," Working Papers 878, Princeton University, Department of Economics, Industrial Relations Section..

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    Keywords

    information good; piracy; copyright; internet; peer-to-peer; software; music;

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