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The Computer Generation's Willingness to Pay for Originals when Pirates are Present – A CV study

Author

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  • Holm, Håkan

    () (Department of Economics, Lund University)

Abstract

A contingent valuation method is applied to study subjects' willingness to pay for originals when illegal copies are freely available. The subjects consisted of 234 Swedish undergraduate students from the "computer generation". Only 2% of the "normal" (and 0% of the "elite") students were willing to pay the retail price for the original. However, the majority was prepared to pay a non-negligible amount for the original. Demand curves and profit maximizing behaviors are analyzed. The price elasticity of piracy indicates that piracy is insensitive to price cuts. The results have implications for the calculation of damages of piracy.

Suggested Citation

  • Holm, Håkan, 2000. "The Computer Generation's Willingness to Pay for Originals when Pirates are Present – A CV study," Working Papers 2000:9, Lund University, Department of Economics, revised 16 Mar 2001.
  • Handle: RePEc:hhs:lunewp:2000_009
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    File URL: http://swopec.hhs.se/lunewp/papers/lunewp2000_009.pdf
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    References listed on IDEAS

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    1. Takeyama, Lisa N, 1997. "The Intertemporal Consequences of Unauthorized Reproduction of Intellectual Property," Journal of Law and Economics, University of Chicago Press, vol. 40(2), pages 511-522, October.
    2. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 155-166, June.
    3. Johnson, William R, 1985. "The Economics of Copying," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 158-174, February.
    4. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
    5. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-246, April.
    6. Bakos, Yannis & Brynjolfsson, Erik & Lichtman, Douglas, 1999. "Shared Information Goods," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 117-155, April.
    7. Paul R. Portney, 1994. "The Contingent Valuation Debate: Why Economists Should Care," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 3-17, Fall.
    8. Besen, Stanley M., 1986. "Private copying, reproduction costs, and the supply of intellectual property," Information Economics and Policy, Elsevier, vol. 2(1), pages 5-22.
    9. Liebowitz, S J, 1985. "Copying and Indirect Appropriability: Photocopying of Journals," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 945-957, October.
    10. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
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    Cited by:

    1. Ünlü, Vural & Hess, Thomas, 2003. "The optimal level of technical copyright protection: A game-theoretic approach," Working Papers 9/2003, University of Munich, Munich School of Management, Institute for Information Systems and New Media.

    More about this item

    Keywords

    Piracy; Contingent Valuation; Damages; Software;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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