Nonlinear Income Inequality Effect on Software Piracy

23 Pages Posted: 2 Oct 2009 Last revised: 12 Nov 2009

See all articles by Seoung Joun Won

Seoung Joun Won

Missouri Public Service Commission

Jongick Jang

Hanshin University

Date Written: September 26, 2009

Abstract

In this paper, we examine the relationship between income inequality and piracy rate in the presence of network effects. We build a theoretical framework which examines how income thresholds determine individual users’ positive net benefits from piracy. We claim that the proportion of the population with positive net benefits from piracy increases with income inequality at a diminishing rate, and then eventually decreases. We provide empirical evidence for this inverted U-shaped relationship between income inequality and piracy rates, controlling for income, judicial efficiency, and fixed broadband subscribers. Our theoretical and empirical results imply that mild anti-piracy policies would make software producers better off in countries whose income inequality is moderate, but worse off in countries whose income inequality is severe. Therefore, policies against piracy should be strategically designed considering the non-linear effects of income inequality.

Keywords: software piracy, income inequality, network effects

JEL Classification: L1, O34, L86

Suggested Citation

Won, Seoung Joun and Jang, Jongick, Nonlinear Income Inequality Effect on Software Piracy (September 26, 2009). Available at SSRN: https://ssrn.com/abstract=1478907 or http://dx.doi.org/10.2139/ssrn.1478907

Seoung Joun Won (Contact Author)

Missouri Public Service Commission ( email )

No Address Available
United States
573-751-3234 (Phone)
573-751-1847 (Fax)

HOME PAGE: http://www.psc.mo.gov

Jongick Jang

Hanshin University ( email )

137 HANSHINDAE-GIL, OSAN-SI
GYEONGGI-DO
Korea, Republic of (South Korea)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
58
Abstract Views
769
rank
391,584
PlumX Metrics