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The Nature and Incidence of Software Piracy: Evidence from Windows

  • Susan Athey
  • Scott Stern

This paper evaluates the nature, relative incidence and drivers of software piracy. In contrast to prior studies, we analyze data that allows us to measure piracy for a specific product - Windows 7 - which was associated with a significant level of private sector investment. Using anonymized telemetry data, we are able to characterize the ways in which piracy occurs, the relative incidence of piracy across different economic and institutional environments, and the impact of enforcement efforts on choices to install pirated versus paid software. We find that: (a) the vast majority of "retail piracy" can be attributed to a small number of widely distributed "hacks" that are available through the Internet, (b) the incidence of piracy varies significantly with the microeconomic and institutional environment, and (c) software piracy primarily focuses on the most "advanced" version of Windows (Windows Ultimate). After controlling for a small number of measures of institutional quality and broadband infrastructure, one important candidate driver of piracy - GDP per capita - has no significant impact on the observed piracy rate, while the innovation orientation of an economy is associated with a lower rate of piracy. Finally, we are able to evaluate how piracy changes in response to country-specific anti-piracy enforcement efforts against specific peer-to-peer websites; overall, we find no systematic evidence that such enforcement efforts have had an impact on the incidence of software piracy.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19755.

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Date of creation: Dec 2013
Date of revision:
Publication status: published as The Nature and Incidence of Software Piracy: Evidence from Windows , Susan Athey, Scott Stern. in Economic Analysis of the Digital Economy , Goldfarb, Greenstein, and Tucker. 2015
Handle: RePEc:nbr:nberwo:19755
Note: IO PR
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  1. Andrew Burke, 1996. "How effective are international copyright conventions in the music industry?," Journal of Cultural Economics, Springer, vol. 20(1), pages 51-66, March.
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