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Does Copyright Enforcement Encourage Piracy?

Author

Listed:
  • Rick Harbaugh

    (Claremont McKenna College)

  • Rahul Khemka

    (Georgetown University)

Abstract

More intensive copyright enforcement reduces piracy, raises prices, and lowers consumer surplus. We show that these results do not hold regarding the extent rather than intensity of enforcement. When enforcement is targeted at high-value buyers such as corporate and government users, the copyright holder has an incentive to charge super-monopoly prices, thereby encouraging piracy among low-value buyers. Extending enforcement down the demand curve broadens the copyright holder’s captive market, leading to lower prices and higher sales that can increase both profits and consumer surplus. The standard tradeoff between the incentive to generate intellectual property and the cost of monopoly power is therefore avoided. Private enforcement by copyright holders may be insuciently extensive since consumers can also benefit from more extensive enforcement. Similarly, new technologies which lead to stronger control over illicit use can paradoxically benefit consumers.

Suggested Citation

  • Rick Harbaugh & Rahul Khemka, "undated". "Does Copyright Enforcement Encourage Piracy?," Claremont Colleges Working Papers 2000-14, Claremont Colleges.
  • Handle: RePEc:clm:clmeco:2000-14
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    File URL: http://www.claremontmckenna.edu/rdschool/papers/2000-14.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Francisco Vázquez & Richard Watt, 2011. "Copyright piracy as prey–predator behavior," Journal of Bioeconomics, Springer, vol. 13(1), pages 31-43, April.
    2. Takeyama, Lisa N., 2009. "Copyright enforcement and product quality signaling in markets for computer software," Information Economics and Policy, Elsevier, vol. 21(4), pages 291-296, November.
    3. Baker, Matthew J & Cunningham, Brendan M, 2006. "Court Decisions and Equity Markets: Estimating the Value of Copyright Protection," Journal of Law and Economics, University of Chicago Press, vol. 49(2), pages 567-596, October.
    4. Dyuti S. Banerjee & Teyu Chou, 2007. "Copyright Protection And Innovation In The Presence Of Commercial Piracy," Monash Economics Working Papers 05-07, Monash University, Department of Economics.
    5. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
    6. Tsai, Ming-Fang & Chiou, Jiunn-Rong & Lin, Chun-Hung A., 2012. "A model of counterfeiting: A duopoly approach," Japan and the World Economy, Elsevier, vol. 24(4), pages 283-291.
    7. Kristina M. Lybecker, 2008. "Keeping it real: anticounterfeiting strategies in the pharmaceutical industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(5), pages 389-405.
    8. D Banerjee, 2004. "Sensitivity To Tax Revenues and Optimal Anti-piracy Policy Instruments," Econometric Society 2004 Australasian Meetings 330, Econometric Society.
    9. Shariffah Zamoon & Shawn Curley, 2008. "Ripped from the Headlines: What can the Popular Press Teach us about Software Piracy?," Journal of Business Ethics, Springer, vol. 83(3), pages 515-533, December.
    10. Dyuti Banerjee & Ahmed Khalid & Jan-Egbert Sturm, 2005. "Socio-economic development and software piracy. An empirical assessment," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2091-2097.
    11. Banerjee, Dyuti S., 2006. "Lobbying and commercial software piracy," European Journal of Political Economy, Elsevier, vol. 22(1), pages 139-155, March.
    12. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
    13. Francesco BALDUCCI, 2010. "The Web's Promotional Effect and Artists' Strategies," Working Papers 345, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    14. Martin Peitz & Patrick Waelbroeck, 2003. "Piracy of Digital Products: A Critical Review of the Economics Literature," CESifo Working Paper Series 1071, CESifo Group Munich.

    More about this item

    Keywords

    piracy; internet; intellectual property; copyright protection; super-monopoly pricing;

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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