Tolerance or Deterrence of End-user Piracy and the Impact of Intellectual Property Rights Protection?(2016)
We study when the original product developer makes costly investment to deter end-user piracy in a given regime of IPR protection. We find when the consumers’ tastes are sufficiently diverse and IPR protection is weak, it is profitable for the product developer to tolerate piracy, while deter in all other situations. The relationship between the optimal level of deterrence from the product developer (private anti-piracy measure) and the degree of IPR protection in the economy (public anti-piracy measure) is non-monotonic. The deterrence level from the product developer generally increases with the quality of the pirated good except when consumers’ tastes are very diverse and pirated quality is very high. The overall relationship between the quality of pirated good and piracy rate is non-monotonic. When making a comparison with commercial piracy, we find a pirate is more likely to survive under commercial piracy than end-user piracy.
Publication DateSummer 2016
Citation InformationSougata Poddar and Yuanzhu Lu. "Tolerance or Deterrence of End-user Piracy and the Impact of Intellectual Property Rights Protection?" (2016)
Available at: http://works.bepress.com/sougata_poddar/11/