COPYRIGHT PROTECTION AND INNOVATION IN THE PRESENCE OF COMMERCIAL PIRACY

Dyuti Banerjee and Teyu Chou

No 05-07, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper uses a strategic entry-deterrence approach to address the effects of anti-commercial piracy policies on a firm’s incentive to innovate. Monitoring increases the firm’s incentive to innovate. However, inclusion of innovation does not necessarily result in monitoring as the socially optimal policy. If monitoring is the socially optimal policy then the commercial pirate’s entry may or may not be deterred. The entry-deterring limit price and quality is less than that in the monopoly case. Only in the extreme situation the monopoly results are restored.

Keywords: Accommodating strategy; aggressive strategy; copyright protection; innovation. (search for similar items in EconPapers)
JEL-codes: K42 L11 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2007
New Economics Papers: this item is included in nep-com, nep-ino, nep-law and nep-tid
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