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Why Do Software Manufacturers Tolerate Piracy in Transition and Less Developed Countries? A Theoretical Model

Michael Kunin
Center For Econ Research & Grad Education, and Econ Institute, Prague (CERGE-EI)

August 1, 2004

CERGE-EI Working Paper Series No. 231

Abstract:
This paper provides an explanation as to why software manufacturers from developed countries tolerate widespread copyright infringement in less developed countries and often even offer local versions of their products. In a simple two-period framework, I show that if network externalities are present and an improvement in copyright enforcement is expected, then it is profitable for the software manufacturer to enter the market even if it incurs losses in the beginning when copyright enforcement is weak.

Keywords: intellectual property rights, software, piracy, transition, network externalities

JEL Classifications: O34, L2

Working Paper Series

Date posted: November 05, 2009 ; Last revised: November 05, 2009

Suggested Citation

Kunin, Michael, Why Do Software Manufacturers Tolerate Piracy in Transition and Less Developed Countries? A Theoretical Model (August 1, 2004). CERGE-EI Working Paper Series No. 231. Available at SSRN: http://ssrn.com/abstract=1499130

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Contact Information

Michael Kunin (Contact Author)

Center For Econ Research & Grad Education, and Econ Institute, Prague (CERGE-EI) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1 111 21
Czech Republic
42 02 240 05 238 (Phone)