Entrepreneurial Activity in Underground Gaming

Abstract

The institution of intellectual property is hotly debated in regards to the modern proliferation of direct download and P2P file-sharing sites as well as freemium streaming services. While the crux of the controversy usually lies in the legal ramifications of what constitutes legitimate property rights, little is generally said about the economic consequences of such programs. This paper serves to advance an understanding of such consequences, primarily as they relate to the world of video game emulation. Most notably, I look at how entrepreneurial action applies to innovation within as well as the preservation of gaming institutions, specifically in relation to the services provided by the website Emuparadise. Utilizing the entrepreneurial theories of Baumol and Kirzner, I find that, while services like Emuparadise provide enhanced value for gamers through entrepreneurial action, such value is limited by the uncertain legal ground they inhabit. A better understanding of these entrepreneurial outcomes should help inform the overall debate on intellectual property.

Keywords: Entrepreneurship, emulation, intellectual property, black markets, video games, Austrian economics

JEL Classification: L26, P48, Z10