Social influence on software piracy

In this paper, we extend the basic principles of Michel's model to a dynamical setting that allows us to study the effect of social influence on software piracy. We consider that social dynamics affect the decision-making process in two different ways: producing a positive network externality on individual consumers' preferences for the product but at the same time providing the knowledge and ability to pirate. We obtain that, on one hand, permeability of society accepting piracy culture has no significant effects on sales. On the other, scenarios with a positive ‘optimal’ value of piracy exist when there is a slight quality differential between originals and pirate copies. This can explain some interesting cases present in the real-world software industry.