Strategic Piracy Management for Digital Products

31 Pages Posted: 13 Sep 2007 Last revised: 13 May 2014

See all articles by Sang Hoo Bae

Sang Hoo Bae

Clark University - Department of Economics

Pilsik Choi

Clark University

Date Written: 2007

Abstract

The purpose of this paper is to investigate how different types of strategic interactions between two firms affect their optimal pricing and private copy protection levels of digital products. In our model, the firms do not directly interact with each other in terms of prices, but they become interdependent through private copy protection levels. Our analysis shows that 1) stronger public copy protection leads to lower private copy protection and more piracy when the firms regard their private copy protection levels as "strategic substitutes," but higher private copy protection and less piracy when they treat their private copy protection levels as "strategic complements" and 2) more compatibility between private copy protection systems leads to lower private copy protection and more piracy. We also discuss public policy issues regarding these findings.

Keywords: digital rights management, copyright protection, piracy, strategic substitutes, strategic complements

JEL Classification: L13, L82, L86, O34

Suggested Citation

Bae, Sang Hoo and Choi, Pilsik, Strategic Piracy Management for Digital Products (2007). Available at SSRN: https://ssrn.com/abstract=1013188 or http://dx.doi.org/10.2139/ssrn.1013188

Sang Hoo Bae (Contact Author)

Clark University - Department of Economics ( email )

950 Main Street
Worcester, MA 01610
United States

Pilsik Choi

Clark University ( email )

950 Main Street
Worcester, MA 01610
United States
508-793-7748 (Phone)

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