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Piracy as an ethical decision

Author

Listed:
  • Martyna Kobus

    () (Faculty of Economic Sciences, University of Warsaw)

  • Michał Krawczyk

    () (Faculty of Economic Sciences, University of Warsaw)

Abstract

We consider a monopolist producer of information goods that may be subject to unauthorized copying. The key feature of our model is that we allow consumers to have ethical concerns based on equity theory that may reduce their utility of such a copy. We derive the formulas describing demand for the product. We find that piracy reduces prices and producers' profit, an effect that can be limited by such measures as copyright enforcement (proxied by expected value of punishment for piracy) and anti-piracy campaigns. Welfare effects are also analyzed and generally turn out to be ambiguous.

Suggested Citation

  • Martyna Kobus & Michał Krawczyk, 2013. "Piracy as an ethical decision," Working Papers 2013-22, Faculty of Economic Sciences, University of Warsaw.
  • Handle: RePEc:war:wpaper:2013-22
    as

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    File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP107.pdf
    File Function: First version, 2013
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
    2. Bergstrom, Theodore C & Bagnoli, Mark, 1993. "Courtship as a Waiting Game," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 185-202, February.
    3. Rob, Rafael & Waldfogel, Joel, 2006. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 29-62, April.
    4. Flinn, Christopher J & Heckman, James J, 1983. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 28-42, January.
    5. Paul Belleflamme & Martin Peitz, 2010. "Digital Piracy: Theory," CESifo Working Paper Series 3222, CESifo Group Munich.
    6. 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.
    7. Susan J. Harrington, 1989. "Why People Copy Software and Create Computer Viruses," Information Resources Management Journal (IRMJ), IGI Global, vol. 2(3), pages 28-38, July.
    8. Bagnoli, Mark & Khanna, Naveen, 1992. " Insider Trading in Financial Signaling Models," Journal of Finance, American Finance Association, vol. 47(5), pages 1905-1934, December.
    9. Landes, William M & Posner, Richard A, 1989. "An Economic Analysis of Copyright Law," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 325-363, June.
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    Citations

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    Cited by:

    1. Michal Krawczyk & Anna Kukla-Gryz & Joanna Tyrowicz, 2015. "Digital piracy and the perception of price fairness," Working Papers 2015-24, Faculty of Economic Sciences, University of Warsaw.
    2. Wojciech Hardy & Michal Krawczyk & Joanna Tyrowicz, 2015. "Friends or foes? A meta-analysis of the link between "online piracy" and sales of cultural goods," Working Papers 2015-23, Faculty of Economic Sciences, University of Warsaw.

    More about this item

    Keywords

    digital piracy; copyright protection; equity theory;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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