On the optimal level of protection in DRM

Illtae Ahn and Ilsoon Shin

Information Economics and Policy, 2010, vol. 22, issue 4, 341-353

Abstract: We examine the optimal level of Digital Rights Management when stronger DRM makes copyright infringement more difficult, but at the cost of decreased value for legal users. We find that DRM-free is profit-maximizing when copyright enforcement is strong or free-rider problems are severe. Otherwise, DRM is optimal for the firm. Even in the latter case, copyright enforcement and DRM are substitutes, and, thus, stronger copyright enforcement by the government reduces the usage of inefficient DRM. We also find that, although stronger copyright enforcement may raise the price of the legitimate product, consumers often benefit overall due to the decreased use of DRM.

Keywords: DRM; DRM-free; Digital; products; Optimal; level; of; protection; Copyright; enforcement (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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