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On the Impact of Piracy on Innovation in the Presence of Technological and Market Uncertainty

  • Dyuti Banerjee
  • Ishita Chatterjee

This paper analyses the effect of piracy on innovation in the presence of R&D competition with technological and market uncertainty. With a single innovating firm facing technological uncertainty, piracy unambiguously retards innovation. However, with R&D competition where firms face market and technological uncertainties, we show that piracy may enhance overall innovation. We also show that if the difference between the probabilities of success of the innovating firms is relatively large then piracy enhances the R&D investment and profit of the less efficient firm.

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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 26-09.

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Length: 25 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:mos:moswps:2009-26
Contact details of provider: Postal: Department of Economics, Monash University, Victoria 3800, Australia
Phone: +61-3-9905-2493
Fax: +61-3-9905-5476
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  1. Sana El Harbi & Gilles Grolleau, 2008. "Profiting from Being Pirated by 'Pirating' the Pirates," Kyklos, Wiley Blackwell, vol. 61(3), pages 385-390, 08.
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