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Piracy in a two-sided software market

  • Rasch, Alexander
  • Wenzel, Tobias

This paper studies the impact of software piracy in a two-sidedmarket setting. Software platforms attract developers and users to maximize their profits. The equilibrium price structure is affected by piracy: license fees to developers are higher with more software protection but the impact on user prices is ambiguous. A conflict between platforms and software developers over software protection may arise: whereas one side benefits from better protection, the other party loses out. Under platform compatibility, this conflict is no longer present.

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Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 85.

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Date of creation: 2013
Date of revision:
Handle: RePEc:zbw:dicedp:85
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  1. BELLEFLAME, Paul & PEITZ, Martin, . "Platform competition and seller investment incentives," CORE Discussion Papers RP 2339, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
  4. Martin Peitz, 2004. "A Strategic Approach to Software Protection: Comment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(2), pages 371-374, 06.
  5. Dewenter, Ralf & Haucap, Justus & Wenzel, Tobias, 2011. "On file sharing with indirect Network effects between concert ticket sales and music recordings," DICE Discussion Papers 28, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  6. Joshua Slive & Dan Bernhardt, 1998. "Pirated for Profit," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 886-899, November.
  7. Jay Pil Choi, 2010. "TYING IN TWO-SIDED MARKETS WITH MULTI-HOMING -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 607-626, 09.
  8. repec:rje:randje:v:37:y:2006:3:p:720-737 is not listed on IDEAS
  9. Kiema, Ilkka, 2008. "Commercial piracy and intellectual property policy," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 304-318, October.
  10. Gayer, Amit & Shy, Oz, 2006. "Publishers, artists, and copyright enforcement," Information Economics and Policy, Elsevier, vol. 18(4), pages 374-384, November.
  11. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
  12. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
  13. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
  14. Yoon, Kiho, 2002. "The optimal level of copyright protection," Information Economics and Policy, Elsevier, vol. 14(3), pages 327-348, September.
  15. 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 155-66, June.
  16. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  17. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
  18. Oz Shy & Jacques-Françlois Thisse, 1999. "A Strategic Approach to Software Protection," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 163-190, 06.
  19. Andrei Hagiu, 2009. "Two-Sided Platforms: Product Variety and Pricing Structures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1011-1043, December.
  20. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
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