Does Copyright Enforcement Encourage Piracy?

18 Pages Posted: 2 Dec 2000 Last revised: 12 Oct 2015

See all articles by Rick Harbaugh

Rick Harbaugh

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy; Indiana University - Department of Economics

Rahul Khemka

Claremont McKenna College

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Date Written: August 1, 2001

Abstract

More intensive copyright enforcement reduces piracy, raises prices, and lowers consumer surplus. We show that these results do not hold regarding the extent rather than intensity of enforcement. When enforcement is targeted at high-value buyers such as corporate and government users, the copyright holder has an incentive to charge super-monopoly prices, thereby encouraging piracy among low-value buyers. Extending enforcement down the demand curve broadens the copyright holder's captive market, leading to lower prices and higher sales that can increase both profits and consumer surplus. The standard tradeoff between the incentive to generate intellectual property and the cost of monopoly power is therefore avoided. New technologies which lead to stronger control over illicit use can paradoxically benefit consumers.

Keywords: piracy, internet, intellectual property, copyright protection

JEL Classification: K11, K42, L86

Suggested Citation

Harbaugh, Rick and Khemka, Rahul, Does Copyright Enforcement Encourage Piracy? (August 1, 2001). Claremont Colleges Working Paper No. 2001-14, Available at SSRN: https://ssrn.com/abstract=244949 or http://dx.doi.org/10.2139/ssrn.244949

Rick Harbaugh (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-2777 (Phone)
812-855-3354 (Fax)

HOME PAGE: http://www.bus.indiana.edu/riharbau/

Indiana University - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

Rahul Khemka

Claremont McKenna College

Claremont, CA 91711-6420
United States

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