Abstract

http://ssrn.com/abstract=825165
 
 

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How Much Anti-Piracy Effort is Too Much? - A Study of the Global Software Industry


Bin Gu


Arizona State University (ASU) - Department of Information Systems

Vijay Mahajan


University of Texas at Austin - Department of Marketing

February 2005

McCombs Research Paper

Abstract:     
Piracy is commonly considered to be detrimental to the software industry. The industry has taken aggressive steps to curb piracy worldwide. This study questions the wisdom of such aggressive anti-piracy effort in a competitive environment. We show that piracy attracts the most price sensitive consumers. By removing these consumers from the market, piracy reduces firms' incentive to engage in self-destructing price competition. In equilibrium, piracy can increase the industry profit in markets with large variations in consumer price sensitivity. Using software sales and piracy data from 50 countries between 1996 and 2002, we find that anti-piracy effort has indeed hurt the software industry in such markets.

Number of Pages in PDF File: 39

Keywords: piracy, digital piracy, intellectual property, software, competition

JEL Classification: C23, D31, D43, L13, L86, O34

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Date posted: October 26, 2005  

Suggested Citation

Gu, Bin and Mahajan, Vijay, How Much Anti-Piracy Effort is Too Much? - A Study of the Global Software Industry (February 2005). McCombs Research Paper. Available at SSRN: http://ssrn.com/abstract=825165 or http://dx.doi.org/10.2139/ssrn.825165

Contact Information

Bin Gu (Contact Author)
Arizona State University (ASU) - Department of Information Systems ( email )
Tempe, AZ
United States
Vijay Mahajan
University of Texas at Austin - Department of Marketing ( email )
Red McCombs School of Business
2100 Speedway, #B6600
Austin, TX 78712
United States
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