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http://ssrn.com/abstract=637186
 
 

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Piracy and Competition


Paul Belleflamme


CORE and Louvain School of Management, UCL (Université Catholique de Louvain); CESifo (Center for Economic Studies and Ifo Institute)

Pierre M. Picard


Centre de Recherche en Économie Appliquée (CREA); Universite du Luxembourg

November 2005

CESifo Working Paper Series No. 1350

Abstract:     
The effects of (private, small-scale) piracy on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are assumed to be perfectly differentiated, demands are interdependent because the copying technology exhibits increasing returns to scale. We characterize the Bertrand-Nash equilibria in a duopoly. Comparing equilibrium prices to the prices set by a multiproduct monopolist, we show that competition drives prices up and may lead to price dispersion. Competition reduces total surplus in the short run but provides higher incentives to create in the long run.

Number of Pages in PDF File: 37

Keywords: information goods, piracy, copyright, pricing

JEL Classification: L13, L82, L86, K11, O34

working papers series


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Date posted: December 17, 2004  

Suggested Citation

Belleflamme, Paul and Picard, Pierre M., Piracy and Competition (November 2005). CESifo Working Paper Series No. 1350. Available at SSRN: http://ssrn.com/abstract=637186

Contact Information

Paul Belleflamme (Contact Author)
CORE and Louvain School of Management, UCL (Université Catholique de Louvain) ( email )
34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, B-1348
Belgium
+32 10 47 82 91 (Phone)
+32 10 47 43 01 (Fax)
HOME PAGE: http://perso.uclouvain.be/paul.belleflamme/Site/Home.html
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Pierre M. Picard
Centre de Recherche en Économie Appliquée (CREA) ( email )
Campus Limpertsberg
162A, avenue de la Faïencerie
Luxembourg, 1511
Luxembourg
Universite du Luxembourg
L-1511 Luxembourg
Luxembourg
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