Publisher's Announcements and Piracy-Monitoring Devices in Software Adoption

Eric Darmon, Alexandra Rufini () and Dominique Torre ()
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Eric Darmon: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this paper, we investigate the distribution strategy of a software publisher. The user adoption context is characterized by uncertainty about quality (experience good) and heterogeneous piracy costs. Users can purchase or get unauthorized/illegal copies (digital piracy) of the software during two periods (or not adopt at all). Between these two periods, users can acquire information through word-of-mouth. To maximize profit, the publisher needs to decide about price, quality and level of monitoring of piracy. We show that the software publisher can profit from accommodation a certain level of piracy of the product. We add to the literature by explicitly considering the opportunity for the publisher to cheat about future price and monitoring levels (misleading announcements). This strategy that is falsely permissive towards piracy, can sometimes appear more profitable. However, when the degree of sophistication of user expectations about the publisher's strategy increases, only a strategy that is permissive (with respect to piracy) with non misleading announcements remains robust.

Keywords: software distribution strategy; piracy; experience good; misleading announcements (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-ipr, nep-pr~ and nep-iue
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Published in Annals of Economics and Statistics, 2014, 115-116, pp.409-430

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Related works:
Journal Article: Publisher's Announcements and Piracy-Monitoring Devices in Software Adoption (2014)
Working Paper: Publisher's announcements and piracy-monitoring devices in software adoption (2014)
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