Belleflamme and Peitz (2010)
|Belleflamme and Peitz (2010)|
|Title:||Digital piracy: Theory|
|Author(s):||Belleflamme, P., Peitz, M.|
|Citation:||Belleflamme, P., & Peitz, M. (2010). Digital piracy: Theory. CESifo Working Paper Series No. 3222. Available at SSRN 1698618.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Aguiar and Martens (2013), Belleflamme, Omrani and Peitz (2015)|
|About the Data|
|Data Description:||This study uses a literature review|
|Data Type:||Primary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
This article reviews recent theoretical contributions on digital piracy. It starts by elaborating on the reasons for intellectual property protection, by reporting a few facts about copyright protection, and by examining reasons to become a digital pirate. Next, it provides an exploration of the consequences of digital piracy, using a base model and several extensions (with consumer sampling, network effects, and indirect appropriation). A closer look at market-structure implications of end-user piracy is then taken. After a brief review of commercial piracy, additional legal and private responses to end-user piracy are considered. Finally, a quick look at emerging new business models is taken.
Main Results of the Study
- This article extensively reviews the theoretical literature on piracy of information products. This literature, which started in the mid-1980s, really mushroomed at the turn of the 21st century when digital piracy became a topic of intense debate.
- Initially, in terms of welfare, it was considered that piracy was likely to improve welfare in the short run (as the deadweight loss of monopoly is reduced) but to deteriorate it in the long run (as lower profits imply lower incentives to create and to improve products). These conclusions were established in a number of seminal papers considering a simple monopoly framework.
- Subsequent analyses extended this basic approach in several directions. First, it was suggested that piracy also had the potential to increase the right-holders’ profits. A second line of extension was to examine the effects of piracy in environments where several digital products compete with one another. Finally, other contributions consider other responses to piracy than actions through prices, namely legal actions, technical measures and copyright levies.
Policy Implications as Stated By Author
Given the importance of digital media industries, the interest in emerging business models is deemed to grow, so the present survey may have to be significantly complemented in a few years from now.
Coverage of Study
|Level of aggregation:||Case study|
|Period of material under study:||1985 to 2009|