Belleflamme (2002)
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Source Details
Belleflamme (2002) | |
Title: | Pricing Information Goods in the Presence of Copying |
Author(s): | Belleflamme, P. |
Year: | 2002 |
Citation: | Belleflamme, Paul. Pricing information goods in the presence of copying. U of London Queen Mary Economics Working Paper 463 (2002). |
Link(s): | Definitive , Open Access |
Key Related Studies: | |
Discipline: | |
Linked by: | Belleflamme, Omrani and Peitz (2015) |
About the Data | |
Data Description: | This study uses no original data but is a review of existing literature to analyse two models of copying: one where there is marginal or no cost to the producer and one where there is a cost significant enough to make copying inefficient. Using this analysis the study then determines the effects of copying on social welfare. |
Data Type: | |
Secondary Data Sources: | |
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Data Analysis Methods: | |
Industry(ies): | |
Country(ies): | |
Cross Country Study?: | Yes |
Comparative Study?: | Yes |
Literature review?: | Yes |
Government or policy study?: | No |
Time Period(s) of Collection: | |
Funder(s): |
Abstract
The effects of (private, small-scale) copying on the pricing behavior of producers of information goods are studied within a unified model a la Mussa-Rosen (1978). When the copying technology involves a marginal cost and no fixed cost, producers act independently. In this simple framework, we highlight the trade-off between ex ante and ex post efficiency considerations (how to provide the right incentives to create whilst limiting monopoly distortions?). When the copying technology involves a fixed cost and no marginal cost, pricing decisions are interdependent. We investigate the strategic pricing game by focussing on some significant symmetric Nash equilibria.
Main Results of the Study
- Copying reduces the overall profits of the producer, but increases the availability of goods at a cheaper price to the consumer.* Therefore overall copying leads to an increase in social welfare
Policy Implications as Stated By Author
- Information goods can be protected by IP laws but the existence of such laws does not on its own guarantee protection * Technical measures (such as DRM) can also protect goods but are also imperfect and can be 'cracked' * As a result, illegal copying (piracy) cannot be completely avoided* It is there important to understand how copying affects the demand for legitimate information goods and the pricing strategy of their producers* It is also important from a policy perspective to understand the social welfare implications of copying
Coverage of Study
Datasets
Sample size: | 2 |
Level of aggregation: | Models of copying |
Period of material under study: | 1981 to 2001 |