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Piracy of digital products: A critical review of the theoretical literature
Authors:Martin Peitz  Patrick Waelbroeck  
Affiliation:aInternational University in Germany, Campus 3, 76646 Bruchsal, Germany;bEGSH/ENST, 46 rue Barrault, 75013 Paris, France
Abstract:Digital products can be copied at almost no cost and are subject to non-commercial copying by final consumers. Because the copy of a copy typically does not deteriorate in quality, copies can become available on a large scale basis – this can be illustrated by the surge of file-sharing networks. In this paper we provide a critical overview of the theoretical literature that addresses the economic consequences of end-user copying. We analyze basic models of piracy, models with indirect appropriation, models with network effects, and models with asymmetric information. We discuss the applicability of the different modeling strategies to a number of industries such as software, video and computer games, music, and movies.
Keywords:Information good   Piracy   Copyright   IP protection   Internet   Peer-to-peer   Software   Music
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