Piracy, Entry, and Competition in Content Markets

Juan-Jose Ganuza () and Ivan Rendo ()
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Juan-Jose Ganuza: Comision Nacional de los Mercados y la Competencia (CNMC), Spain
Ivan Rendo: Toulouse School of Economics, Toulouse, France

No 26-02, Working Papers from NET Institute

Abstract: Piracy is central to digital markets, where identical content can be accessed legally or through unauthorized channels. While easier piracy seems likely to intensify competition and lower prices, it also reduces profitability and discourages entry. We develop a circular-city model with free entry in which consumers jointly choose content and access mode. Stronger enforcement raises prices for a fixed number of firms but also attracts competitors. Prices rise with enforcement in less competitive markets but can follow an inverted U in more competitive markets, where entry eventually pushes prices down. Extensions show that piracy can also weaken competition and raise prices by attracting consumers most willing to switch between legal providers.

Keywords: competition; piracy; entry; digital markets (search for similar items in EconPapers)
JEL-codes: D43 K42 L13 L82 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2026-09
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