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Publisher's announcements and piracy-monitoring devices in software adoption

Author

Listed:
  • Éric Darmon

    (CREM UMR CNRS 6211, University of Rennes 1, France)

  • Alexandra RUFINI

    (GREDEG CNRS, Université Nice Sophia-Antipolis, France)

  • Dominique Torre

    (GREDEG CNRS, Université Nice Sophia-Antipolis, France)

Abstract

In this paper, we investigate the distribution strategy of a software publisher. The user adoption context is characterized by uncertainty about quality (experience good)and heterogeneous piracy costs. Users can purchase or get unauthorized/illegal copies (digital piracy) of the software during two periods (or not adopt at all). Between these two periods, users can acquire information through word-of-mouth. To maximize profit, the publisher needs to decide about price, quality and level of monitoring of piracy. We show that the software publisher can profit from accommodation a certain level of piracy of the product. We add to the literature by explicitly considering the opportunity for the publisher to cheat about future price and monitoring levels (misleading announcements). This strategy that is falsely permissive towards piracy, can sometimes appear more profitable. However, when the degree of sophistication of user expectations about the publisher's strategy increases, only a strategy that is permissive (with respect to piracy) with non misleading announcements remains robust.

Suggested Citation

  • Éric Darmon & Alexandra RUFINI & Dominique Torre, 2014. "Publisher's announcements and piracy-monitoring devices in software adoption," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201404, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:201404
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    References listed on IDEAS

    as
    1. Eric Darmon & Alexandra Rufini & Dominique Torre, 2009. "Back to software "profitable piracy": the role of information diffusion," Economics Bulletin, AccessEcon, vol. 29(2), pages 543-553.
    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. Ram D. Gopal & G. Lawrence Sanders, 2006. "Do Artists Benefit from Online Music Sharing?," The Journal of Business, University of Chicago Press, vol. 79(3), pages 1503-1534, May.
    4. Michael Stolpe, 2000. "Protection Against Software Piracy: A Study Of Technology Adoption For The Enforcement Of Intellectual Property Rights," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(1), pages 25-52.
    5. repec:hal:journl:halshs-00481823 is not listed on IDEAS
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    More about this item

    Keywords

    software distribution strategy; piracy; experience good; misleading announcements;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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