Publisher's Announcements and Piracy-Monitoring Devices in Software Adoption

23 Pages Posted: 20 Mar 2014

See all articles by Eric Darmon

Eric Darmon

Centre de Recherche en Économie et Management (CREM)

Alexandra Rufini

Université de Nice Sophia Antipolis - Groupe de Recherche en Droit, Economie et Gestion (GREDEG)

Dominique Torre

Université Côte d'Azur, GREDEG, CNRS

Date Written: November 19, 2013

Abstract

In this paper, we investigate the distribution strategy of a software publisher. The user adoption context is characterized by uncertainty about quality (experience good)and heterogeneous piracy costs. Users can purchase or get unauthorized/illegal copies (digital piracy) of the software during two periods (or not adopt at all). Between these two periods, users can acquire information through word-of-mouth. To maximize profit, the publisher needs to decide about price, quality and level of monitoring of piracy. We show that the software publisher can profit from accommodation a certain level of piracy of the product. We add to the literature by explicitly considering the opportunity for the publisher to cheat about future price and monitoring levels (misleading announcements). This strategy that is falsely permissive towards piracy, can sometimes appear more profitable. However, when the degree of sophistication of user expectations about the publisher’s strategy increases, only a strategy that is permissive (with respect to piracy) with non misleading announcements remains robust.

Keywords: software distribution strategy, piracy, experience good, misleading announcements

JEL Classification: D43, D83, K42, L15

Suggested Citation

Darmon, Eric and Rufini, Alexandra and Torre, Dominique, Publisher's Announcements and Piracy-Monitoring Devices in Software Adoption (November 19, 2013). Available at SSRN: https://ssrn.com/abstract=2411447 or http://dx.doi.org/10.2139/ssrn.2411447

Eric Darmon (Contact Author)

Centre de Recherche en Économie et Management (CREM) ( email )

7 place Hoche
Rennes, Bretagne 35065
France

Alexandra Rufini

Université de Nice Sophia Antipolis - Groupe de Recherche en Droit, Economie et Gestion (GREDEG) ( email )

250, rue Albert Einstein
Valbonne, 06560
France

Dominique Torre

Université Côte d'Azur, GREDEG, CNRS ( email )

250, rue Albert Einstein
Valbonne, 06560
France

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