Limiting End-user Piracy | The Role of Private and Public Anti-Piracy Measure

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We study when the original product developer makes costly investment to deter end-user piracy in a given regime of IPR protection. We find that when the consumers' tastes are sufficiently diverse and IPR protection is weak, only then it is profitable for the product developer to tolerate piracy. In all the other cases, it is profitable to deter, unless piracy is blockaded by strong IPR protection. The relationship between the optimal deterrence level from the product developer (private anti-piracy measure) and the degree of IPR protection in the economy (public anti-piracy measure) can be monotonic or non-monotonic. The private optimal deterrence level generally increases with the quality of the pirated good except when consumers' tastes are sufficiently diverse and the quality of the pirated good is sufficiently high. Public anti- piracy measure unambiguously reduces piracy.


This article was originally published in Annals of Economics and Finance, volume 20, issue 1, in 2019.


Annals of Economics and Finance