Piracy and competition

Paul Belleflamme and Pierre Picard

No 2005057, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: The effects of (private, small-scale) piracy on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are assumed to be perfectly differentiated, demands are interdependent because the copying technology exhibits increasing returns to scale. We characterize the Bertrand-Nash equiliria in a duopoly. Comparing equilibrium prices to the prices set by a multiproduct monopolist, we show that competition drives prices up and may lead to price dispersion. Competition reduces total surplus in the short run but provides higher incentives to create in the long run.

Keywords: Information goods; piracy; copyright; pricing (search for similar items in EconPapers)
JEL-codes: K11 L13 L82 L86 O34 (search for similar items in EconPapers)
Pages: 39
Date: 2005-09-01
New Economics Papers: this item is included in nep-com, nep-cul, nep-law, nep-mkt, nep-net and nep-reg
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Citations: View citations in EconPapers (1)

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http://sites.uclouvain.be/econ/DP/IRES/2005-57.pdf (application/pdf)

Related works:
Journal Article: Piracy and Competition (2007)
Working Paper: Piracy and competition (2007)
Working Paper: Piracy and competition (2005)
Working Paper: Piracy and Competition (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvec:2005057

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