Price, Piracy, and Search: Which Pirates Respond to Changes in the Legal Price?

MIS Quarterly (forthcoming)

PDF contains Abstract & Introduction only

Georgia Tech Scheller College of Business Research Paper No. 4849529

5 Pages Posted: 31 May 2024

See all articles by Koushyar Rajavi

Koushyar Rajavi

Scheller College of Business, Georgia Tech

Brett Danaher

Chapman University - The George L. Argyros College of Business and Economics

Jesse Newby

Carnegie Mellon University - H. John Heinz III College of Information Systems and Public Policy

Date Written: February 01, 2024

Abstract

Prior research suggests that high prices may motivate the decision to pirate entertainment goods. We analyze a natural experiment that decreased the tax rate, and hence also the net prices of eBooks, by 14% in Ireland while several other European countries were not affected. Using country-specific data on piracy visits, we find that this price decrease caused only a small and statistically insignificant decrease in total eBook piracy visits. However, we further decompose piracy visits into those of direct pirates, who navigate directly to piracy sites, and indirect pirates, who search to find piracy sites. The 14% price decrease caused no change in direct piracy visits but caused a statistically significant 27% decrease in indirect piracy visits. These findings align with prior research suggesting that search can play an important role in piracy, but only for some pirates. Our results demonstrate the potential of using price to mitigate piracy, but they also highlight the challenges firms face in competing with piracy for experienced pirates. We conclude by detailing both the policy and managerial implications of our work.

Keywords: digital piracy, pricing, information goods, natural experiment, generalized synthetic control

Suggested Citation

Rajavi, Koushyar and Danaher, Brett and Newby, Jesse, Price, Piracy, and Search: Which Pirates Respond to Changes in the Legal Price? (February 01, 2024). MIS Quarterly (forthcoming)
PDF contains Abstract & Introduction only
, Georgia Tech Scheller College of Business Research Paper No. 4849529, Available at SSRN: https://ssrn.com/abstract=4849529 or http://dx.doi.org/10.2139/ssrn.4849529

Koushyar Rajavi (Contact Author)

Scheller College of Business, Georgia Tech ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Brett Danaher

Chapman University - The George L. Argyros College of Business and Economics ( email )

1 University Drive
Orange, CA 92866
United States

Jesse Newby

Carnegie Mellon University - H. John Heinz III College of Information Systems and Public Policy ( email )

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