Piracy of Digital Products: A Critical Review of the Theoretical Literature

School of Business Administration Working Paper No. 42/2006

43 Pages Posted: 22 Mar 2006

See all articles by Martin Peitz

Martin Peitz

University of Mannheim - Department of Economics

Patrick Waelbroeck

Telecom ParisTech

Date Written: February 2006


Digital products can be copied almost at no cost and are subject to non-commercial copying by final consumers. Because the copy of a copy typically does not deteriorate in quality, copies can become available on a large scale basis - this can be illustrated by the surge of file-sharing networks. In this paper we provide a critical overview of the theoretical literature that addresses the economic consequences of end-user copying. We analyze basic models of piracy, models with indirect appropriation, models with network effects, and models with asymmetric information. We discuss the applicability of the different modeling strategies to a number of industries such as software, video and computer games, music, and movies.

Keywords: information good, piracy, copyright, IP protection, internet, peer-to-peer, software, music

JEL Classification: L11, L82, L86

Suggested Citation

Peitz, Martin and Waelbroeck, Patrick, Piracy of Digital Products: A Critical Review of the Theoretical Literature (February 2006). Available at SSRN: https://ssrn.com/abstract=889128 or http://dx.doi.org/10.2139/ssrn.889128

Martin Peitz (Contact Author)

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
+49 621 181-1835 (Phone)

HOME PAGE: http://peitz.vwl.uni-mannheim.de/

Patrick Waelbroeck

Telecom ParisTech ( email )

46 rue Barrault
F-75634 Paris, Cedex 13

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