Innovation and copyright infringement: The Case of Commercial Piracy and End-user Piracy

Dyuti Banerjee and Sougata Poddar ()
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Dyuti Banerjee: Department of Economics, Monash University, Australia

No 2013-09, Working Papers from Auckland University of Technology, Department of Economics

Abstract: The purpose of this paper is to analyse the question, whether copyright infringement of digital products like software commonly labelled as piracy impedes innovation. We find the answer depends on the nature of piracy i.e. whether it is end-users or commercial piracy. For end user piracy, copyright infringement does not necessarily impede innovation; in fact it can be shown that it encourages innovation when the pirates are active. However, for commercial piracy, it always impedes innovation which has negative implications on the overall welfare of the society. We show under what conditions the government intervention through IPR protection strategy (like monitoring and imposing a fine to the pirate) can support the copyright holder for higher level of innovation. We find the socially optimally monitoring rate for the government that result in maximum innovation for the copyright holder

Keywords: Innovation; piracy; monitoring; social welfare (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 L21 L26 O3 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-09
New Economics Papers: this item is included in nep-com, nep-ict, nep-ino, nep-ipr, nep-pr~ and nep-iue
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