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Effects of Taxation on Software Piracy Across the European Union

  • Nicolas Dias Gomes


    (Faculty opf Economics, University of Coimbra and INESC-Coimbra, Portugal)

  • Pedro André Cerqueira


    (Faculty opf Economics, University of Coimbra and GEMF, Portugal)

  • Luís Alçada Almeida

    (Faculty opf Economics, University of Coimbra and INESC-Coimbra, Portugal)

This paper explores the relation between levels of taxation among different types of households in the European Union and the levels of software piracy from 1996 to 2010. It extends previous works introducing a large panel data set for the European Union and it´s different regions. We estimate our model using the fixed effect, comparing results from the Euro Area and the Countries that joined EU in 2004 and 2007. Results show that levels of taxation increase the levels of software piracy losses; moreover these results depend on marital status and number of children. The weight of taxation on GDP, namely the taxes on consumption, have a positive effect on piracy losses while the impact of inflation is negative and marginal. Additional to this we also found that the relative importance of these taxes in relation to total taxation can affect this phenomenon. An increase in the weight of capital taxation would decrease software piracy while this effect was opposite when considering the relative importance of consumption taxes.

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Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2014-03.

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Length: 48 pages
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:gmf:wpaper:2014-03.
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  1. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
  2. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  4. Rajeev Goel & Michael Nelson, 2009. "Determinants of software piracy: economics, institutions, and technology," The Journal of Technology Transfer, Springer, vol. 34(6), pages 637-658, December.
  5. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
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