40 Pages Posted: 4 Oct 2009 Last revised: 20 May 2010
Date Written: May 20, 2010
Why do some individuals pirate digital music while others pay for it? Using data on a sample of undergraduate students, we study the determinants of music piracy by looking at whether a respondent’s last song was obtained illegally or not. In doing so, we incorporate (i) the individual-specific transactions costs that constitute the effective price of illegal music; and (ii) individual willingness to pay (WTP) for digital music, which we elicit using a simple field experiment and which we use to control for the unobserved heterogeneity of preferences between respondents. Our empirical results indicate that a respondent’s subjective probability of facing a lawsuit and her degree of morality both have a negative impact on the likelihood that her last song was obtained illegally. These results are robust whether WTP is estimated parametrically or nonparametrically. We conclude by discussing the practical implications of our findings.
Keywords: Music Piracy, Transactions Costs, Subjective Expectations
JEL Classification: D12, K11, K42, Z11
Suggested Citation: Suggested Citation
Bellemare, Marc F. and Holmberg, Andrew M., The Determinants of Music Piracy in a Sample of College Students (May 20, 2010). Available at SSRN: https://ssrn.com/abstract=1481272 or http://dx.doi.org/10.2139/ssrn.1481272