The Determinants of Music Piracy in a Sample of College Students
Marc F. Bellemare
University of Minnesota - Twin Cities - Department of Applied Economics
Andrew M. Holmberg
US Department of Justice
May 20, 2010
Why do some individuals pirate digital music while others pay for it? Using data on a sample of undergraduate students, we study the determinants of music piracy by looking at whether a respondent’s last song was obtained illegally or not. In doing so, we incorporate (i) the individual-specific transactions costs that constitute the effective price of illegal music; and (ii) individual willingness to pay (WTP) for digital music, which we elicit using a simple field experiment and which we use to control for the unobserved heterogeneity of preferences between respondents. Our empirical results indicate that a respondent’s subjective probability of facing a lawsuit and her degree of morality both have a negative impact on the likelihood that her last song was obtained illegally. These results are robust whether WTP is estimated parametrically or nonparametrically. We conclude by discussing the practical implications of our findings.
Number of Pages in PDF File: 40
Keywords: Music Piracy, Transactions Costs, Subjective Expectations
JEL Classification: D12, K11, K42, Z11
Date posted: October 4, 2009 ; Last revised: May 20, 2010
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