On Software Piracy
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The pervasiveness of the illegal copying of software is indeed a worldwide phenomenon. Economists argue that when the piracy takes place at the end-users' level, the original software developer finds it profitable to allow limited piracy when the effect of network externality is reasonably strong in the users market. We argue when the piracy is of retail in nature, the same logic cannot be extended as the reason for piracy and show that it is always optimal for the original software developer to protect its software even when the effect of network externality is reasonably strong in the end-users' market. We suggest that piracy depends more on fundamental issues like demand environment, market structure, nature of piracy and nature of competition. The other issue we cover here is the economic impact of piracy on the welfare of a society. We discuss various policy implications on regulating piracy in developing as well as developed markets.
IDEA Publishing Inc.
Economic Theory | Other Economics
Poddar, S. (2004). On software piracy. In H. S. Kehal & V. P. Singh (Eds.), Digital economy: Impacts, influences and challenges (pp. 175-199). Hershey, PA: IDEA Group Publishing.
Idea Group Inc.