75 Pages Posted: 21 Jul 2013 Last revised: 5 May 2016
Date Written: May 4, 2016
Controlling digital piracy has remained a top priority for manufacturers of information goods, as well as for many governments around the world. Among the many forms taken by digital piracy, we focus on an increasingly common one -- namely, online piracy -- that is facilitated by torrent sites and cyberlockers who bring together consumers of pirated content and its suppliers. Motivated by recent empirical literature which makes a clear distinction between anti-piracy efforts that restrict supply of pirated goods (supply-side enforcement) and ones that penalize illegal consumption (demand-side enforcement), we develop a simple economic model and discover some fundamental differences between these two types in terms of their impacts on innovation and welfare. All in all, supply-side enforcement turns out to be the "longer arm" -- it has a more desirable economic impact in the long run. Our results have clear implications for manufacturers, consumers, and policymakers.
Keywords: Online piracy, anti-piracy measure, supply-side enforcement, demand-side enforcement, innovation, welfare
Suggested Citation: Suggested Citation
Dey, Debabrata and Kim, Antino and Lahiri, Atanu, Online Piracy and the 'Longer Arm' of Enforcement (May 4, 2016). Available at SSRN: https://ssrn.com/abstract=2296116 or http://dx.doi.org/10.2139/ssrn.2296116