Online Piracy and the “Longer Arm” of Enforcement

Debabrata Dey (), Antino Kim () and Atanu Lahiri ()
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Debabrata Dey: Foster School of Business, University of Washington, Seattle, Washington 98195
Antino Kim: Kelley School of Business, Indiana University, Bloomington, Indiana 47405
Atanu Lahiri: Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080

Management Science, 2019, vol. 65, issue 3, 1173-1190

Abstract: Controlling digital piracy has remained a top priority for manufacturers of information goods, as well as for many governments around the world. Among the many forms taken by digital piracy, we focus on an increasingly common one—namely, online piracy —that is facilitated by torrent sites and cyberlockers who bring together consumers of pirated content and its suppliers. Motivated by recent empirical literature that makes a clear distinction between antipiracy efforts that restrict supply of pirated goods ( supply-side enforcement) and ones that penalize illegal consumption ( demand-side enforcement), we develop a simple economic model and discover some fundamental differences between these two types in terms of their impacts on innovation and welfare. All in all, supply-side enforcement turns out to be the “longer arm”—it has a more desirable economic impact in the long run. Our results have clear implications for manufacturers, consumers, and policy makers.

Keywords: online piracy; supply-side enforcement; demand-side enforcement; innovation; welfare (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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