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Anti-piracy policy and quality differential in markets for information goods

Francisco Martínez-Sánchez and Javier M. López Cuñat
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Javier M. López Cuñat: Universidad de Alicante

Authors registered in the RePEc Author Service: Javier Mateo López-Cuñat

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper we analyze the strategic decisions of the government, the incumbent and the pirate in a market where the good is piratable. We show that deterred or accommodated piracy can occur in equilibrium, but pure monopoly cannot occur for any anti-piracy policy. We also show that the initial quality differential between the original and the pirated product is essential to explain the effects of an increase in the quality of pirated product on both the level of piracy and the optimal monitoring rate. Assuming a one-stage entry process and a sufficiently high quality differential, we prove that the incumbent always prefers to move first and make a credible commitment to a price. However, this is not true with a two-stage entry process.

Keywords: for-profit piracy; quality; monitoring; price competition. (search for similar items in EconPapers)
JEL-codes: K42 L13 L86 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-01
New Economics Papers: this item is included in nep-com, nep-cul, nep-ind and nep-law
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Published by Ivie

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2011-02.pdf Fisrt version / Primera version, 2011 (application/pdf)

Related works:
Journal Article: Anti-piracy policy and quality differential in markets for information goods (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2011-02

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