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
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: Suggested Citation